A    SOUND,    HONEST,    TRUE   AND 
STABLE    MONEY. 


i 


THE   LUTfTGEN   MONETARY   SYSTEM* 

The  Natujl  and  Economic  Solution  of  the  World's  Monetary 

Problem.  j£j 

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[The  world's  tendency  towards  a  uniform  standard 
and  the  permanent  establishment  of  the  gold  standard  can 
only  be  accomplished  through  bimetallism  and  through  the 
operation  of  this  system.] 


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"A  WORK  OF  THE  GREATEST  VALUE." 


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.    The  Natural  and  Economic  Solution  of  the  World's  Monetary 
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Problem. 


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[The  world's  tendency  towards  a  uniform  standard  /i 
and  the  permanent  establishment  of  the  gold  standard" ca^p 
only  be  accomplished  through  bimetallism  and  thr^rgh^he 
operation  of  this  system.]  a  *"     /\> 


BY 


FRED'K  WM.  LUTTGEN. 

40  Exchange  Place,  New  York  City. 


389253 


Copyright  1897  by 

Fred'k  Wm.  Luttgen. 

All  rights  reserved. 


This   copy,    when  bearing  the   author's   autograph, 
may  be  exchanged  for  any  subsequent  edition. 


CONTENTS. 


PAGE 

Preface,            ......  7 

Introduction,   -           -           -           -           -           -  11 

Part  I,               -                      -           -           -           -  16 

Part  II,              ------  39 

Bill  Proposed,     -           -           -           -           -  43 

Part  III,            ......  59 

Part  IV,            ......  122 


"  It  should  certainly  be  our  earnest  endeavor  to  amend 
to  the  utmost  of  our  power  all  existent  evils,  and  out  of  that 
duty  to  posterity,  by  which  all  true  men  are  influenced  to 
avert,  so  far  as  we  may,  the  perils  which  menace  the  distant 
future."  J.  W.  FARRAR, 

Dean  of  Canterbury. 


"  There  could  be  no  opposition  among  any  portion  of 
the  people  to  the  use  of  silver  when  it  would  not  demonetize 
gold."  Hon.  JOHN  SHERMAN, 

/;/  the  United  States  Senate. 


PREFACE. 


The  monetary  science,  notwithstanding  the  improve- 
ments in  all  the  other  branches  of  the  scientific  world, 
remains  to-day  with  the  same  imperfections  that  existed 
centuries  ago. 

The  discoveries  of  the  application  of  steam  and  elec- 
tricity have  aided  more  the  spread  of  commerce  and  civil- 
ization than  any  other  agent.  These  agents,  however,  have 
been  antagonized  in  the  march  of  progress  by  an  imperfect 
monetary  system  or  medium  of  exchange. 

The  monetary  system  remains  to-day  in  its  primitive 
state,  but  when  properly  adjusted,  as  this  system  provides, 
will  exercise  greater  powers  than  both  steam  and  electricity 
in  the  extension  of  commerce,  civilization  and  Chris- 
tianity. 

The  merchant  seems  to  have  left  this  question  in  the 
past  entirely  to  the  banker  ;  but  the  banker  has  given  no 
attention  to  perfect  the  monetary  system,  but  has  improved 
and  facilitated  exchanges  and  the  means  to  insure  safety  for 
centralized  capital,  etc.  He  has  taken  no  measures  to 
reduce  the  frequency  of  panics,  well  satisfied  that  his  ex- 
perience and  his  measures  of  safety  would  protect  him 
against  losses  during  the  periods  of  any  panics  that  might 
occur. 

The  merchant  has  been  more  public-spirited  than  the 
banker ;  i.  e.,  in  establishing  the  system  of  insurance  he  pro- 
vides for  the  safety  of  others  as  well  as  of  himself. 

We  also  may  take  the  Mississippi  planter,  exposed  to 
the  periodical  dangers  of  inundation  by  the  Mississippi 
River  with  its  1,680  feet  of  fall,  and  a  course  through  many 
latitudes.  He  was  not  satisfied  in  building  levees  merely 
to  protect  his  own  plantation  against  the  recurring  calami- 
ties, but  through  his  efforts  a  substantial  system  of  levees 
has  been  constructed  that  give  protection  to  all  industries 
within  the  Mississippi  Valley. 


A  SOUND,  HONEST,  TRUE  AND  STABLE  MONEY. 

The  world's  primary  money  is  based  upon  gold  and 
silver,  one  nation  having  the  gold  standard,  another  the 
silver  standard  ;  while  some,  due  to  the  fluctuations 
between  these  two  standards,  have  become  so  embarrassed 
in  their  monetary  affairs,  resulting  in  depression  of  business 
and  industry  generally,  that  we  find  them  with  paper 
money  deriving  its  value  from  its  limitation  and  the  neces- 
sity for  a  medium  of  exchange. 

All  monetary  disturbances  of  the  past  in  solvent  nations 
have  been  caused  by  the  artificial  relation  between  the  two 
metals.  If  these  two  metals  had  been  properly  adjusted, 
that  one  would  take  the  place  of  the  other  at  all  times,  no 
such  monetary  disturbances  could  have  taken  place. 

The  money  of  the  world  is  bimetallic,  and  no  nation, 
whether  on  a  gold  monometallic  basis  or  otherwise,  can 
escape  the  effect  of  this  bimetallic  system  of  the  world. 

It  is  the  natural  tendency  of  the  world  to  aim  at  a  uni- 
form standard,  and  for  this  reason  the  gold  standard, 
adopted  by  the  leading  commercial  nations,  is  the  object  to 
be  attained  by  all  other  nations  ;  but  the  gold  standard  is 
not  selected  by  them  on  account  of  the  advantages  that 
gold  may  possess,  but  simply  because  it  is  the  existing 
standard  of  the  leading  commercial  nations,  and  undoubtedly 
has  been  so  adopted  for  its  advantages.  This  natural 
tendency  towards  one  standard  has  produced  a  monetary 
dislocation,  and  will  further  cause  serious  disturbances  or 
panics  from  time  to  time,  for  as  nation  after  nation  will  adopt 
this  standard,  gold  will  become  in  greater  demand  and 
silver  correspondingly  decrease  in  value  until  an  inevitable 
panic  will  restore  bimetallism. 

The  monetary  question  is  not  an  international  question, 
for  sound  money  at  home  will  be  sound  money  abroad,  and 
fiat  money,  whether  by  international  agreement  or  other- 
wise, will  be  unstable  money  at  home.  Recognizing  that 
every    nation's    monetary    system    is    influenced    by    the 


bimetallic  system  of  the  world,  this  system  will  not  intro- 
duce a  new  monetary  metal  with  any  nation,  but  will  sim- 
ply adjust  the  two  metals  now  used  as  money,  so  that  they 
may  be  at  all  times  interchangeable  and  create  a  stable 
money  heretofore  unknown. 

In  the  monetary  disturbances  of  the  past  years  the  term 
"to  do  something  for  silver"  has  been  frequently  quoted. 
To  establish  a  stable  money  it  is  impossible  "  to  do  some- 
thing for  silver,"  for  the  simple  reason  that  a  stable  money 
absolutely  requires  the  employment  of  silver,  for  without 
silver  no  stability  in  the  monetary  system  can  be  attained. 

The  available  gold  for  monetary  purposes  in  the  world  is 
approximately  from  $3,500,000,000  to  $4,000,000,000.  The 
available  supply  of  silver  for  monetary  purposes  in  the 
world,  on  the  basis  of  the  former  ratios  of  15^  to  1  or  16 
to  1,  is  estimated  to  be  about  the  same ;  that  is  to  say,  from 
$3,500,000,000  to  $4,000,000,000,  but  at  present  market  value 
of  silver  this  would  only  be  about  one-half  that  amount,  and 
the  total  gold  and  silver  would  not  exceed  $5,600,000,000 
at  the  present  gold  value,  an  amount  equal  to  but  $4  per 
capita  of  the  world's  population.  It  will  be  seen  that  when 
the  two  metals  are  properly  adjusted,  silver  may  rise 
through  the  demand  for  money  to  its  former  value  and 
even  to  a  much  higher  plane. 

There  is  not  too  much  gold  and  silver  in  the  world  to 
be  used  as  money,  nor  would  there  be  too  much  if  the  sup- 
ply were  increased  four-fold.  We  would  then  have  but 
$16  per  capita  to  the  world's  population,  an  amount  ex- 
ceedingly limited  when  commerce  may  encircle  the  globe. 
This  demand  may  be  partly  supplied  by  new  bullion,  partly 
by  the  appreciation  of  silver. 

It  may  be  safely  estimated  that  through  the  struggle  for 
a  uniform  standard,  silver  money  has  depreciated  fully  50 
per  cent,  and  gold  has  correspondingly  appreciated.  This 
result,  however,  would  be  modified  by  any  improved  sys- 
tem of  paper  money  and  bankers'  and  mercantile  credits, 
and  by  the  limited  use  of  silver  as  token  money. 

It  is  for  economic  reasons  the  aim  of  every  nation  to 
adopt  the  standard  of  the  leading  commercial  nations,  but 
through  this  effort  one  metal  would  be  demonetized  as  long 
as  the  two  metals  are  not  properly  adjusted.  Without  such 
adjustment  it  would  be  impossible  for  all  nations  to  adopt 


IO 

the  gold  standard,  for  the  simple  reason  that  the  supply  of 
gold  would  be  insufficient  for  a  universal  standard. 

The  gold  monometallists  desire  to  demonetize  one-half 
of  the  world's  money  in  order  that  the  other,  by  which 
their  wealth  is  measured,  may  appreciate ;  but  such  princi- 
ples deserve  no  sympathy,  and  are  on  a  par  of  those  of  the 
highwayman  or  pirate. 

The  object  of  this  work  is,  therefore,  to  bring  the  two 
metals  into  their  proper  relation  in  order  to  effect  a  univer- 
sal stable  standard  and  to  maintain  the  existing  gold 
unit. 

While  the  purchasing  power,  measure  of  exchange  or 
value  of  gold  is  regulated  like  that  of  any  other  commodity 
by  supply  and  demand,  the  natural  demand  which  commerce 
would  create  is  materially  modified  by  a  system  of  treasury 
notes,  bank  notes,  mercantile  credits,  etc.,  by  the  limited  em- 
ployment of  silver,  and  nations  not  yet  on  the  gold  standard. 
Without  these  influences  operating  against  the  demand  of 
gold,  gold  would  be  much  higher  in  value  and  subject  to 
greater  fluctuations. 

It  will,  therefore,  be  seen  that  a  sound  money  must 
necessarily  consist  of  gold,  silver  and  paper,  interchangeable 
at  the  pleasure  of  the  holder. 

Gold  and  silver  must  both  be  redemption  money,  and  pa- 
per must  be  limited  in  amount  to  an  extent  that  may  never 
destroy  confidence  in  case  of  commercial  disturbances. 
When  paper  is  so  limited,  it  practically  expands  the  supply 
of  the  money  metals. 

It  will  be  seen,  therefore,  that  to  establish  a  sound  money, 
the  employment  of  silver  will  be  a  necessity  and  nothing 
"  would  be  done  for  the  sake  of  silver." 

As  regards  our  own  monetary  affairs  and  the  opposition 
to  a  sound  money  on  the  part  of  our  National  Banks,  it  may 
be  policy  "  to  do  something"  for  these  banks  to  remove  the 
opposition  and  to  bring  them  under  Government  con- 
trol. 

Unfortunately,  we  have  many  bankers  with  so  little 
knowledge  of  the  art  of  banking  and  finance  that  unless 
they  are  permitted  to  issue  money  they  are  thrown  into 
despair.  Fred'k  Wm.  Luttgen. 

October  ii,  1897. 


II 
INTRODUCTION. 

Since  the  existence  of  our  Government  our  commerce 
with  other  nations  has  suffered  greatly  from  time  to  time 
through  the  necessary  instability  of  our  money  under  the 
existing  monetary  system  of  a  fixed  ratio  between  gold  and 
silver. 

The  older  commercial  nations,  through  their  accumula- 
tion of  wealth  far  prior  to  the  existence  of  this  Government, 
are  holding  enviable  positions  as  creditor  nations  in  the 
commercial  world .  This  country,  however,  with  its  great  nat- 
ural resources  undeveloped,  has  not  only  found  employment 
for  its  own  money,  but  also  very  largely  for  foreign  capital. 
The  very  employment  of  this  foreign  capital,  although 
benefiting  us  in  developments  at  home,  at  the  same  time  has 
practically  placed  the  stability  of  our  monetary  system  at 
the  option  of  our  creditors  to  be  used  as  their  interest  may 
dictate. 

To  enable  the  United  States  to  extend  her  commerce  to 
an  extent  to  which  the  intelligence  of  her  citizens  entitles 
her,  it  will  become  necessary  to  establish  a  monetary  system 
guaranteeing  a  stability  impossible  to  be  attained  under  the 
prevailing  system.  Not  even  the  system  of  England,  which 
is  looked  upon  as  having  promoted  England's  prosperity,  if 
introduced  here,  would  stand  the  test  of  the  drains  our 
financial  system  has  been  subjected  to. 

FIXED  RATIO. 

No  greater  fallacy  than  that  of  the  fixed  ratio  of  the  two 
necessary  money  metals  has  ever  prevailed.  It  has  been 
nursed  by  capitalists  for  their  own  benefit  until  the  tendency 
of  the  world  for  one  standard  of  money  has  made  the  con- 
tinuance of  the  existing  ratio  for  silver  impracticable,  and  cap- 
italists have  now  become  monometallists,  a  policy  which 
would  insure  continued  instability  and  further  their  inter- 
ests. 

As  England  increases  her  profits  largely  in  her  com- 
merce with  nations  on  the  silver  standard  through  the 
fluctuations  of  exchanges,  so  in  like  manner  our  capitalists, 
aided  by  foreign  capital,  have  found  it  profitable  to  discour- 
age the  introduction  of  a  stable  money,  which  would  forbid 


12 

them  to  create  the  frequent  panics  from  which  our  country 
has  suffered,  while  other  leading  commercial  nations  have 
enjoyed  the  greatest  prosperity. 

The  system  which  is  herewith  submitted  to  the  public  is 
superior  to  that  of  England.  It  establishes  a  gold  standard 
which  cannot  be  assailed,  whether  of  debtor  or  creditor  na- 
tion. The  system  recognizes  that  the  world's  money  is  bi- 
metallic, and  is  based  upon  the  principle  that  a  sound  money 
system  demands  that  silver  shall  protect  the  gold  reserve. 
Under  this  system  no  want  of  confidence  in  our  money  can 
occur,  and  consequently  it  would  avoid  many  a  future  recur- 
rence of  nearly  all  the  panics  which  have  been  so  destructive 
to  our  industries. 

A  perfect  monetary  system  must  offer  to  the  creditor 
payment  in  gold,  if  he  so  prefers.  The  tendency  of  this 
system  will  be  to  concentrate  gold  here  and  consequently  to 
ship  silver  abroad  in  payment  of  our  foreign  indebtedness. 

INTERNATIONAL  QUESTION. 

It  is  difficult  to  understand  how  men  of  mature  years 
and  familiar  with  the  natural  laws  of  commerce  can  claim 
that  the  question  of  money  is  an  international  question.  It 
is  no  more  international  than  the  solvency  of  a  nation.  If 
the  United  States  were  to  adopt  this  system  it  would  soon 
be  demonstrated  that  the  monetary  question  is  not  an  in- 
ternational question,  as  the  operation  of  the  system  would 
even  compel  England,  in  order  to  protect  her  gold  reserve, 
to  adopt  the  same  system,  and  this  without  international 
conventions  and  commissioners  of  any  kind,  but  simply 
from  the  motive  of  self-protection.  Not  only  will  the  sys- 
tem protect  us  against  our  creditors,  but  it  will  aid  other 
commercial  debtor  nations  and  have  a  tendency  to  increase 
our  commercial  relations  with  them  very  largely. 

This  system  would  spread  the  spirit  of  the  Monroe  Doc- 
trine in  aiding  our  South  American  sister  republics  to  ac- 
quire financial  independence. 

This  system   will  accomplish  more  in  building   up  our 
commerce  with  countries  south  of  us  than  any  other  meas 
ure.    It  will  offer  advantages  to  silver  standard  countries, 
which  will  have  a  tendency  to  make  New  York  City,  and 
not  London,  as  at  present,  their  future  clearing  house. 


13 

We  are  entering-  upon  a  new  commercial  epoch,  and  the 
United  States  should  not  only  be  in  a  position  to  compete 
for  South  American  commerce,  but  for  that  of  Asia  and 
Africa  as  well.  The  Government  cannot  aid  the  individual 
in  such  enterprises  more  than  by  the  acceptance  of  the 
Luttgen  Monetary  System. 

MEASURE  OF  VALUE. 

The  measure  of  value  and  medium  of  exchange  consists 
in  the  commercial  world  of  three  essential  dependent  parts  : 

First. — Primary  money,  that  is,  metal  money  of  intrinsic 
or  bullion  value,  upon  which  the  other  two  parts  are  based, 
and  without  which  in  adequate  quantities  no  stability  can 
exist. 

Second. — Auxiliary  money,  such  as  our  Government 
notes,  our  National  Bank  notes,  secured  beyond  all  doubt 
for  the  ready  exchange  into  primary  money,  token  coins, 
such  as  the  present  silver  dollar  and  subsidiary  coinage. 

Tliird. — Credit  money,  such  as  checks,  sight  drafts, 
bankers'  credits,  etc.,  etc. 

When  auxiliary  money  exceeds  the  limits  of  prudence 
and  confidence,  it  becomes  credit  money  of  the  third  class, 
narrows  the  underlying  basis,  and  the  hoarding  of  primary 
money  becomes  the  natural  result. 

Before  proceeding  further  it  may  be  well  to  refer  more 
fully  to  these  dependent  parts  of  money  to  demonstrate 
their  necessity.  Primary  money,  if  this  were  to  include 
the  entire  stock  of  gold  and  silver  in  the  world,  would  be 
insufficient  to  transact  the  world's  commerce.  The  entire 
supply  does  not  exceed  $6  per  capita.  The  importance  of 
the  auxiliary  money  is,  therefore,  at  once  forced  upon  us. 
This  auxiliary  money  is  necessarily  limited  by  the  primary 
money,  and  to  maintain  its  character  should,  under  the 
greatest  of  safeguards,  not  exceed  the  primary  in  value. 
Nearly  all  our  panics  have  been  the  direct  cause  of  errors 
in  regulating  and  preserving  the  character  of  our  auxiliary 
money. 

PRIMARY  MONEY. 

When  primary  money  consists  of  gold  only,  the  equal 
volume  of  auxiliary  money  would  be  perfectly  safe,  but 
when  this  primary  money  consists  of  both  gold  and  silver, 


14 

the  auxiliary  money  should  not  exceed  66f  per  cent.,  or,  in 
other  words,  40  per  cent,  of  the  whole.  Suppose,  under 
gold  monometallism,  the  world's  gold  money  should  be 
equal  to  $3  per  capita,  with  an  equal  amount  of  auxiliary 
money,  we  would  have  $6 per  capita;  but  in  the  case  of  bi- 
metallism a  primary  money  of  gold  and  silver  equal  to  $6 
per  capita,  and  an  auxiliary  money  of  66^  per  cent.,  or  $4.  per 
capita,  we  would  have  a  total  of  $10 per  capita  as  against  $6 
under  gold  monometallism.  Either  amount  would  be  in- 
sufficient to  build  credit  upon  to  the  extent  required,  if  all 
nations  were  open  to  civilized  commerce. 

The  world's  money  is  at  present  unevenly  distributed, 
and  if  commerce  expands  through  Asia,  Africa  and  South 
America,  the  strain  upon  the  money  reserves  in  the  differ- 
ent commercial  centers  will  be  severely  felt. 

It  will  be  noticed  by  employing  both  of  the  precious 
money  metals,  we  have,  with  the  addition  of  a  conservative 
auxiliary  money,  but  $10  per  world's  capita,  while  at  present 
the  United  States  has  a  capita  circulation  exceeding  $20, 
and  France's  circulation  is  approaching  $40 per  capita,  upon 
which  to  base  credit  money  which  forms  an  essential  part 
of  the  measure  of  value. 

ERRORS  OF  OUR   SYSTEM. 

To  solve  our  money  problem,  the  faults  of  our  system, 
if  such  it  may  be  called,  must  first  be  recognized.  In  our 
system  we  find  two  fundamental  errors. 

The  first,  relating  to  our  primary  money,  which  should 
not  be  limited  to  gold.  By  the  practice  on  the  part  of  our 
Government  of  appropriating  a  profit  from  the  coinage  of 
silver,  silver  loses  the  position  of  primary  money,  and  our 
entire  monetary  system  is  found  to  be  dependent  upon  gold 
only,  and  this  subject  to  manipulation  on  the  part  of  our 
creditors  and  speculative  capital. 

The  second  error  is  found  in  our  auxiliary  money,  the 
source  of  our  recent,  monetary  disturbances,  in  the  fact  that 
the  national  bank  note  circulation  is  not  under  Govern- 
ment control,  and  has  been  increased  and  used  for  the  pur- 
pose of  depleting  the  Government  gold  reserves  and  for 
the  purpose  of  creating  panics. 

Our  money  trouble,  therefore,  is  an  insufficiency  of  pri- 


i5 

mary  money,  caused  by  the  seigniorage  in  silver  and  by  the 
lack  of  control  over  the  National  Bank  note  issue.  The 
first  cause  limits  primary  money  to  gold  only,  and  the 
second  cause  increases  the  circulation  dependent  upon  the 
primary  money  as  a  reserve.  The  note  circulation  must  be 
controlled  by  the  reserve  held  by  the  Government,  and  to 
further  guard  against  endangering  this  reserve,  and  the 
hoarding  of  gold,  as  practiced  by  the  banks  in  the  past,  not 
onlv  to  the  injury  of  the  Government,  but  also  of  their 
clients,  all  creditors  of  banks,  whether  holders  of  notes  or 
depositors,  should  by  law  have  the  option  of  demanding 
either  kind  of  money  the  bank  may  hold  in  its  vaults  or 
have  on  deposit  in  the  clearing  houses  or  elsewhere. 

The  proper  coinage  of  silver  is  provided  for  by  this 
system,  and,  with  the  two  stated  evils  removed,  our  Govern- 
ment can  fearlessly  meet  every  obligation  in  gold  at  the 
pleasure  of  the  holder. 

THE  FREE  COINAGE  OF  SILVER. 

The  term,  "  free  coinage  of  silver,"  appears  to  be  mis- 
understood by  the  public  generally,  the  true  principle  of 
free  coinage  being  that  the  coin  shall  have  bullion  value ; 
consequently,  that  the  cost  of  coinage  shall  be  borne  by  the 
Government,  and  it  signifies  nothing  more  or  less. 

The  mechanical  details  or  regulations  of  the  mints  or 
otherwise  for  the  free  coinage  may  vary  according  to  ex- 
isting circumstances  without  affecting  this  great  principle. 
The  essential  features,  therefore,  of  free  coinage  are  that 
the  coin  must  retain  its  bullion  value,  and  that  an  adequate 
amount  be  constantly  and  regularly  admitted  into  the 
monetary  system.  These  are  the  essential  principles  of 
free  coinage,  and  by  bringing  these  principles  into  practice 
as  to  both  metals,  true  bimetallism  is  established.  Our 
mints  have  an  uniform  daily  capacity.  This  capacity  does 
not  vary  from  day  to  day  ;  consequently,  the  acquisitions  of 
silver  should  be  in  uniform  daily  quantities. 


PART     I, 


GENERAL     ARGUMENT. 


STANDARD. 


The  term  standard  is  not  generally  understood  by  the 
public  nor  even  by  the  average  banker  or  financial  man. 
In  answer  to  my  publication  of  May  10,  1892,  I  received  a 
criticism  from  the  editor  of  one  of  our  New  York  financial 
papers  taking  issue  with  "  gold  being  the  standard  of  the 
leading  nations  of  the  commercial  world."  He  claims  that 
gold  is  not  the  standard  of  the  leading  nations  of  the  com- 
mercial world,  and  quotes  France,  England,  Germany,  the 
United  States  and  Holland  as  countries  where  silver  is  a 
"joint  standard  "  with  gold.  He  adds,  however,  "  that  is 
the  metallic  basis  of  full  tender  money." 

This  editor  confuses  the  word  standard  applied  to  money 
in  its  foreign  relations  with  standard  as  applied  to  domestic 
coinage  or  legal  tender  money.  In  France  silver  is  a  legal 
tender  money  and  consequently  a  standard  currency,  but  it 
is  not  the  standard  of  the  French  money.  Its  standard  is 
gold,  and  gold  only.  The  same  is  true  of  Germany,  Eng- 
land, Holland,  the  United  States  or  any  other  country 
maintaining  the  gold  basis.  Though  gold  in  these  countries 
is  the  only  standard  or  measure  of  money,  it  is  not  the  only 
measure  of  value.  The  measure  of  value  does  not  even  de- 
mand a  sole  representation  of  money  metal. 

In  the  United  States  gold  is  our  standard,  but  our 
measure  of  value  is  gold,  silver  and  paper,  in  common  with 
the  commercial  world.  As  stated,  silver  and  paper  may 
exercise  in  conjunction  with  gold  the  qualities  of  a  measure 
of  value  ;  but  their  amounts  must  be  restricted  in  relation 
to  gold  to  that  extent  that  confidence  may  never  be  shaken. 


17 

With  such  restriction,  gold  plus  such  silver,  plus  such  paper 
combined,  constitute  the  measure  of  value,  and  exercises 
this  power  throughout  the  world  ;  for  such  use  of  silver 
and  paper  practically  increases  the  volume  of  gold.  When, 
however,  such  auxiliary  money  as  silver  and  paper  is  used 
beyond  the  point  of  confidence,  contraction  is  the  result, 
and  gold  alone  becomes  the  measure  of  value. 

It  is  the  object  of  this  system  to  raise  silver  from  an 
auxiliary  to  a  primary  money,  and  to  give  a  stability  to 
money  heretofore  unknown. 

The  metallic  basis  of  full  tender  money  can  only  be  the 
coinage  acceptable  in  final  settlement  to  creditors  abroad. 
In  France  silver  is  not  the  metallic  basis  in  this  sense,  but 
only  for  domestic  purposes,  the  silver  being  supported  by 
the  government. 

Few  of  our  business  men,  bankers  or  financiers  realize 
the  danger  hanging  over  the  commercial  world  should 
silver  become  discredited  in  France,  Germany,  Holland 
or  other  gold  standard  countries.  As  long  as  confidence 
remains  in  their  respective  circulations,  these  are  exercising 
a  tendency  of  lengthening  out  the  supply  of  gold  so  essential 
in  the  exchanges  of  the  world.  The  demand  for  gold  and 
silver  outside  of  the  monetary  demand  being  irregular,  as 
well  as  the  supply  of  both  metals  varying,  it  is  impossible 
to  maintain  a  fixed  ratio  between  them.  Whatever  approx 
imate  ratio  may  have  been  maintained  at  any  time  during 
the  past  was  entirely  due  to  accidental  causes  and  not  influ- 
enced by  the  monetary  laws  of  any  nation.  If  the  mone- 
tary laws  of  any  nation  could  influence  the  relative  value 
of  the  two  metals,  no  monetary  problem  would  be  before  us 
to-day,  and  no  so-called  legal  demonetization  of  silver  would 
have  occurred,  either  in  the  United  States  or  any  other 
country.  The  demonetization  of  silver  was  entirely  due  to 
the  development  and  exactions  of  commerce. 

The  "  joint  standard  "  of  gold  and  silver  for  a  measure 
of  value  or  stable  medium  of  exchange  is  practical  only 
when  the  relation  of  the  two  metals  is  based  upon  a  movable 
ratio  following  the  market  value  of  bullion.  Under  such  a 
"joint  standard"  or  measure  of  value  the  standard  unit 
must  be  gold  to  prevent  fluctuations  in  foreign  exchanges. 
A  fixed  ratio  would  indicate  an  alternating  standard,  how- 
ever near   the   ratio  may  approximate    the  market  value. 


i8 

What  we  need  is  the  gold  standard  for  our  unit  money  and 
a  "joint  standard  "  of  gold  and  silver  for  our  measurement 
of  values.  A  "joint  standard"  not  only  will  represent 
larger  metal  money,  but  will  admit  of  a  greater  auxiliary 
note  issue;  the  whole,  as  stated  before,  constituting  the 
actual  measure  of  value.  Under  the  "  joint  standard  "  the 
National  Government  must  be  prepared  on  demand  to 
exchange  one  metal  for  the  other  ;  the  individual,  however, 
having  the  right  to  pay  in  either  gold,  silver  or  Govern- 
ment paper,  based  upon  gold  and  silver. 

The  fight  at  the  coming  session  of  Congress,  between 
the  National  Banks  and  the  people,  promises  to  be  severe. 
At  the  bankers'  convention  at  Saratoga  recently  a  resolu- 
tion was  again  passed  to  secure  the  circulation  of  the 
country,  which  is  probably  worth  $40,000,000  a  year,  and 
which  amount,  by  the  bankers'  success,  the  people  would 
lose.  It  is,  in  fact,  equivalent  to  taxing  the  people  to  pay 
the  bankers  $40,000,000  per  annum,  but  this  represents  but 
a  small  proportion  of  the  losses  which  the  people  will  be 
compelled  to  sustain  in  case  of  panics  ;  and  under  promis- 
cuous banking  circulation  panics  will  occur  at  short  inter- 
vals. 

It  is  only  necessary  to  refer  to  the  condition  of  affairs  in 
1857  to  condemn  all  money  not  absolutely  issued  by  the 
Government.  The  great  mistake  has  been  made  that  at  the 
expiration  of  twenty  years  the  term  of  the  original  National 
Bank  charter  was  extended  without  modification.  This 
action  has  cost  the  nation  directly  in  interest  probably 
$200,000,000,  and  indirectly,  through  the  panics  forced  upon 
the  country  by  the  National  Banks,  losses  running  into  the 
thousands  of  millions.  The  bankers  do  not  propose  to  make 
silver  a  money  of  redemption,  but  if  they  can  force  the 
Government  to  withdraw  the  greenbacks  and  treasury 
notes  and  remove  the  legal  tender  quality  from  silver,  they 
are  willing  that  the  people  should  suffer  the  loss  on  the 
silver  coinage,  aad  that  the  Government  should  repudiate 
its  most  sacred  obligation.  If  there  is  any  obligation  on 
the  part  of  the  Government  more  sacred  to  be  paid  in  gold 
than  any  other,  it  is  the  obligation  to  pay  the  silver  dollar 
in  gold,  for  the  silver  certificate  is  of  the  most  recent  issue, 
and  the  Government  received  a  gold  dollar's  worth  of 
silver  for  every  dollar  of  this  issue. 


19 
CIRCULATION. 

The  fluctuating  circulating  mediums  in  the  past,  not  only 
in  our  own  country,  but  in  every  country,  have  presented  an 
obstacle  to  commerce,  and  these  obstacles  have  been  most 
severely  felt  in  periods  of  war  and  even  in  unusual  activity 
or  dullness  in  trade.  In  looking  for  a  solution  of  our  mone- 
tary troubles,  we  must,  therefore,  not  look  to  the  past,  for 
there  has  been  no  period  in  history  when  nations  have  not 
suffered  through  the  imperfection  of  their  monetary  system. 

The  difficulties  that  the  United  States  have  encountered 
are  familiar  to  all  business  men,  and  it  is  not  necessary  here 
to  refer  back  to  them  beyond  the  period  covered  by  the 
past  sixty  years,  when  the  present  gold  dollar  was  adopted. 
This  gold  dollar  was  of  reduced  weight,  and  its  object  was 
to  bring  gold  back  into  circulation.  This  very  act 
acknowledges  the  fallacy  of  a  fixed  ratio  between  the  two 
money  metals  ;  yet  sixty  years  have  elapsed,  and  we  find  our- 
selves yet  struggling  under  the  drawbacks  of  the  error  that 
was  then  acknowledged  to  exist. 

BANKING   SYSTEM. 

The  wild  banking  system  that  was  allowed  to  grow  and 
control  the  circulating  medium  of  the  country  collapsed  in 
1857,  producing  a  panic  until  that  time  unparalleled  in 
American  history.  The  results  of  this  panic  were  not  lim- 
ited to  the  ordinary  losses  in  business  and  the  destruction 
of  commerce,  but  became  the  indirect  cause  of  our  Civil 
War.  Civil  wars  do  not  occur  in  periods  of  prosperity. 
The  nation  may  be  drawn  into  foreign  war  at  any  period, 
but  there  is  no  record  in  history  of  any  civil  war,  unless 
poverty  or  hardships  existed.  The  growing  sentiment 
against  slavery  would  have  been  met  by  friendly  settlements 
of  this  question  and  compensation  to  the  slave  owners.  The 
scarcity  ol  gold  made  a  suspension  of  specie  payment  a 
necessity  during  the  war,  when,  had  true  bimetallism  existed 
prior  to  1857,  ar>d  the  note  issue  been  strictly  under  Govern- 
ment control,  this  country  could  have  gone  through  the  war 
without  a  suspension  of  specie  payments  and  thereby  have 
saved  perhaps  one-half  of  the  entire  cost,  an  amount  with 
interest  that  may  be  roughly  estimated  at  $5,000,000,000. 


20 

LEGISLATION. 

The  tentative  nature  of  our  monetary  legislation  since 
1863  left  the  problem  of  its  final  solution  open  for  future  ac- 
complishment. This  unsettled  position  of  our  monetary 
system  led  the  author,  some  ten  years  ago,  to  undertake  the 
study  with  a  perseverance  that  should  lead  to  a  final  solu- 
tion. 

The  first  step  to  be  considered  was  to  ascertain  the 
errors  or  shortcomings  of  our  system  ;  the  second,  the  re- 
quirements necessary  to  make  our  currency  perfect  in  every 
respect,  not  only  to  protect  our  citizens  at  home  from  undue 
fluctuations,  but  also  to  establish  a  currency  which  would 
aid  us  in  our  commercial  relations,  particularly  with  those 
nations  of  our  own  Continent  whose  trade  is  so  industriously 
sought  by  the  commercial  nations  of  Europe.  These  two 
features  thoroughly  realized,  the  author  was  prepared  for 
the  work  of  correcting  existing  errors,  and  perfecting  the 
system  to  accomplish  the  desired  ends. 

The  monetary  question  has  not  been  understood  by  our 
people  nor  by  our  representatives,  but  has  been  treated  in  a  su- 
perficial manner  and  influenced  largely  by  personal  interests. 
The  coining  or  creating  of  money  is  a  function  reserved  by 
the  Constitution  to  the  National  Government.  The  people 
in  the  past  have  not  realized  that  the  issuing  of  an  auxiliary 
paper  money  is  practically  the  coining  or  creating  of  money, 
which,  under  the  Constitution,  cannot  be  delegated  to  any 
of  the  States  or  to  any  corporation.  There  is  nothing  in  our 
monetary  history  previous  to  the  war  that  is  deserving  of 
attention.     It  is  simply  an  account  of  failure  upon  failure. 

When  the  national  bank  note  was  created,  it  was  not 
created  with  a  view  of  perfecting  our  monetary  system,  but 
it  was  created  in  time  of  need  to  aid  the  Government  in 
placing  its  bonds.  One  of  the  greatest  errors  was  made 
when,  at  the  expiration  of  their  charters,  the  same  were  ex- 
tended without  modifying  the  condition  of  circulation.  The 
National  Banks  have  been  the  great  disturbing  element  in 
the  past  five  or  six  years,  and  have  forced  the  repeated  panics 
upon  us. 

The  monetary  legislation  since  the  suspension  of  specie 
payment  has  been  a  creditable  and  progressive  legislation 
until  1893.  The  legislation  of  1873,  instead  of  being  a  crime, 
as  it  is  commonly  termed  in  our  political  campaigns,  was 


21 

most  judicious,  and  to  the  best  interest  of  the  country.  This 
legislation  was  followed  in  1875  by  the  tentative  legislation 
creating  a  trade  dollar.  This  in  turn  was  followed  in  1878 
by  the  Bland  act,  also  progressive  yet  tentative  legislation. 
In  1875  the  act  for  the  resumption  of  specie  payment  on 
January  1,  1879,  was  passed.     To  this  I  will  refer  hereafter. 

In  1890,  the  Sherman  act  was  passed.  This  act  was  also 
progressive  and  tentative  legislation,  but  was  not  considered 
at  the  time  to  be  final  or  perfect.  All  legislation  up  to  this 
period  was  for  the  best,  according  to  the  light  then  possessed 
on  the  subject.  Had  this  legislation  been  followed  prior  to 
1893  by  the  introduction  of  this  system,  the  panics  covering 
the  years  of  1893,  1894,  1895  and  1896  would  not  have  taken 
place.  The  repeal  of  the  Sherman  Law  in  1893  was  an  act 
of  national  folly,  which  the  nation  has  not  yet  fully  recog- 
nized ;  yet  the  continued  excessive  fluctuations  in  business 
will  compel  recognition  of  this  fact  before  long. 

Silver  may  be  considered  the  right  arm  of  the  nation  in 
its  struggle  for  international  commerce,  and  in  its  domestic 
developments.  In  cutting  off  silver,  the  nation  may  be  com- 
pared to  a  man  troubled  with  indigestion  visiting  his  phy- 
sician, and  having  his  right  arm  cut  off,  to  cure  his  indiges- 
tion. 

INDIA. 

A  decline  in  silver  prior  to  1893  interfered  with  the  sale 
of  English  manufactured  goods  and  promoted  home  manu- 
facture. To  protect  her  manufacturers  England  caused  the 
stoppage  of  the  free  coinage  in  India,  and  fixed  the  nominal 
value  of  the  rupee  at  is.  46..,  or  equivalent  to  one-fifteenth 
part  of  the  pound  sterling,  and  both  rupee  and  the  pound 
sterling,  bearing  a  ratio  to  each  other  of  about  twenty-two 
to  one,  were  made  legal  tender. 

The  current  ratio  of  India  had  previously  been  fifteen  to 
one,  and  their  gold  coin,  the  mohur,  of  the  same  weight  as 
the  rupee,  or  165  grains  of  pure  metal ;  while  the  pound  ster- 
ling, which  has  been  substituted,  contains  but  113  grains  of 
pure  gold. 

The  India  monetary  system  may,  therefore,  be  now  com- 
pared with  our  own,  silver  being  maintained  at  a  fictitious 
valuation,  but  this  ruling  has  given  India  a  more  stable  ex- 
change than  she  previously  enjoyed. 


22 

This  advantage  she  has  fully  recognized,  and  refuses  to 
entertain  any  proposition  to  resume  the  free  coinage  of 
silver.  She  does  not  realize  the  danger  that  is  hanging  over 
her  in  maintaining  a  large  silver  circulation  at  a  fictitious 
value.  Her  interests  are  prospering  under  the  temporary 
advantages  her  present  system  offers. 

The  greater  value  of  silver  in  the  interior  of  India,  as 
well  as  in  many  other  silver  standard  countries,  is  due  en- 
tirely  to  the  primitive  nature  of  commerce  and  to  the  pre- 
judices of  the  people. 

This  difference  in  value,  however,  is  only  temporary,  and 
will  not  be  maintained  as  commerce  is  extended  and  the 
people  become  more  enlightened. 

The  present  Indian  monetary  system  is  under  protection 
of  the  home  government,  and  its  stability  is  not  menaced 
by  innumerable  banks  struggling  for  circulation  as  in  our 
own  case. 

If  England  wishes  to  protect  herself  against  the  imme- 
diate increase  of  home  manufacturers  in  her  colonies,  she 
should  place  these  colonies  upon  a  sound  money  standard 
in  harmony  with  that  of  her  own,  and  this  can  only  be  done 
through  the  principles  of  the  Luttgen  Monetary  System. 

The  system  would  harmonize  the  prejudices  of  the 
people  in  favor  of  silver  with  the  gold  standard,  and  manu- 
facturing industries  whether  at  home  or  in  the  colonies 
would  enjoy  their  respective  merits. 

It  was  not  only  the  higher  price  at  which  the  rupee  was 
held  in  the  interior,  but  the  fluctuations  between  the  gold 
standard  and  the  rupee  which  worked  against  English 
manufactured  goods  ;  and  it  will  be  greatly  to  the  benefit 
of  English  manufacturing  interests  to  place  both  metals 
upon  their  bullion  value  on  the  gold  standard  in  the  mone- 
tary systems  of  her  colonies. 

"COIN'S   FINANCIAL   SCHOOL." 

A  publication  which  was  widely  circulated  during  the 
past  year,  purporting  to  be  in  the  interests  of  sixteen  to  one, 
defeated  itself  by  its  own  argument  in  the  statement  on 
page  141,  that  if,  after  the  practical  effect  of  free  coinage, 
it  should  be  demonstrated  that  the  value  of  371^  grains  of 
silver  should  be  less  in  value  than  23.2  grains  of  gold,  the 


23 

dollar  should  be  accordingly  reduced.  The  ratio  of  six- 
teen to  one  is  here  absolutely  abandoned,  as  well  as  the 
theory  of  bimetallism.  Gold  is  intended  to  be  more  of  a 
token  money. 

The  plan  would  favor  repudiation  in  so  far  as  it  would 
reduce  the  weight  of  our  present  gold  dollar.  To  preserve 
the  integrity  of  our  money,  we  must  defend  the  existing 
standard  which  has  prevailed  for  eighteen  years.  In  thus 
lowering  the  value  of  gold  that  it  may  circulate  with  silver, 
"  Coin  "  not  only  abandons  the  ratio  of  sixteen  to  one,  but 
discards  stability,  the  essential  element  of  sound  money. 
It  practically  places  the  cart  before  the  horse,  and  claims 
that  great  results  will  be  obtained.  This  is  a  proposition 
which  every  farmer  has  the  opportunity  to  test. 

The  publication,  it  will  be  seen,  is  inconsistent  and  with- 
out  merit,  and  was  brought  into  notice  more  by  the  eastern 
press,  for  the  purpose,  it  would  seem,  of  intensifying  the 
panic  of  1896. 


"BIMETALLISM." 


The  legalized  use  of  two  metals  (as  silver  and  gold)  in 

the   currency    of    a   country.     The  inferior  money    metal 

(silver)  so  adjusted  to  the  superior  metal  (gold)  that  its 

intrinsic  or  bullion  value  will  permit  ultimate   settlements 

thereby  between  nations,  the  adjustment  to  be  such  that  in 

practice  neither  metal  (silver  nor  gold)  would,  at  any  time, 

become  demonetized. 

Fred'k  Wm.  Luttgen. 


RESUMPTION  ACT  OF  1875. 

To  illustrate  the  evils  of  a  fluctuating  currency,  let  us 
take  the  case  of  two  neighbors  when  gold  was  of  the  value 
of  250  in  our  currency  ;  for  instance,  each  being  worth 
$1,000  in  gold.  A  had  his  wealth  in  gold  coin  ;  B,  his  in  a 
farm;  B  borrows  of  A  $1,000  in  currency,  which  would 
take  $400  of  A's  $  1,000.  B  has  now  $1,400  in  gold  and 
owes  $1,000  in  currency.     In    1879,  B   returns  to  A  $1,000, 


24 

and  has  left  on  hand  $400  in  gold  ;  A,  however,  has  $1,600 
in  gold  through  this  operation.  A  is  now  worth  four 
times  as  much  as  B  is  worth,  when  previously  they  were 
of  equal  worth. 

All  legislation  since  the  war  has  been  in  favor  of  capital. 
The  Resumption  Act  of  1875  should  have  protected  the 
debtor  by  authorizing  existing  debts  to  be  paid  in  gold  at  a 
ratio  then  existing,  providing  the  premium  of  gold  was  not 
greater  than  when  the  debt  was  created. 

THE  ABSURDITY  OF  THE  SO-CALLED  ENDLESS 

CHAIN. 

By  act  of  January  14,  1875,  authorizing  the  resumption 
of  specie  payment,  to  take  effect  on  January  1,  1879,  the 
issue  of  bonds  for  the  maintenance  of  the  reserve  was 
authorized.  The  act  of  May  31,  1878,  referring  to  the  re- 
issue of  treasury  notes,  can  have  no  other  interpretation 
put  upon  it  than  that,  when  such  notes  were  received  as 
custom  or  revenue  dues  to  the  Government,  they  should 
be  put  into  circulation  again  by  meeting  Government 
expenditures;  but  when  such  notes  were  redeemed  by  their 
payment  in  coin,  they  should  be  put  again  into  circulation 
against  the  receipt  of  coin. 

This  is  so  self-evident  that  it  requires  no  argument  ;  if 
it  were  not,  the  item  of  redeemed  notes  would  naturally 
appear  in  the  appropriation  bills  of  Congress ;  but  we  have 
further  proof  that  this  interpretation  was  the  intention  of 
the  law.  In  the  act  of  July  12,  1882,  authorizing  the  issue  of 
certificates  against  the  deposits  of  gold  coin,  and  providing 
for  the  suspension  of  the  issue  of  such  gold  certificates  when- 
ever the  gold  reserve  falls  below  $100,000,000.  It  is  self- 
evident  that  it  was  the  intention  ot  the  law  that  when  this 
gold  reserve  fell  below  $100,000,000,  the  United  States 
Treasury  notes,  redeemed  and  on  hand,  would  be  issued  in 
place  of  the  gold  certificates  against  the  receipts  of  deposits 
of  gold. 

This  question  being  of  such  vital  importance  (should 
this  interpretation  be  doubted),  it  would  be  advisable  to 
bring  the  question  before  the  Supreme  Court  for  its 
decision,  as  well  as  the  question  of  equality  of  all  govern- 
ment money  under  the  law  of  1890. 


25 

THE  INDIANAPOLIS  MONETARY  COMMISSION. 

The  true  motive  of  the  Indianapolis  convention  is  given 
in  the  opening  remarks  of  the  temporary  chairman  in 
advocating  the  substitution  of  National  Bank  note  circula- 
tion for  greenbacks,  and  the  issue  of  National  Bank  notes  to 
the  par  value  of  bonds,  and  the  reduction  of  the  existing  tax. 

The  proceedings  of  the  convention  and  the  subsequent 
action  of  a  commission  appointed  by  the  convention  to 
hold  its  sessions  at  Washington  clearly  demonstrate  that 
the  movement  was  undertaken  in  the  interests  of  the  banks 
to  secure  to  them  the  circulation  of  the  country.  It  would 
seem  that  the  object  of  this  action  on  the  part  of  the  banks 
is  to  obtain  for  their  plan  a  semblance  of  popular 
approval. 

The  National  Bank  circulation  was  created  during  the 
war  with  an  object  of  furthering  Government  interests.  In 
late  years,  however,  the  National  Banks  have  antagonized 
the  Government,  and  there  is  no  reason  why  their  circula- 
tion should  be  further  extended. 

The  New  York  Commercial  Advertiser,  a  paper  devoted 
to  the  interests  of  combinations  of  capital,  stated  truly  in 
the  editorial  of  January  12,  1897,  "the  talk  about  the 
Government  being  in  the  '  banking  business'  is  pure  rub- 
bish ;  as  a  matter  of  fact,  the  Government  is  not  in  the 
'  banking  business.'  It  would  be  much  nearer  the  mark  to 
say  that  National   Banks  were  in  the  Government  business. 

"Equally  irrelevant  is  the  gabble  about  an  'endless 
chain '  endowing  banks  with  the  exclusive  power  to  issue 
paper  currency,  as  has  been  proposed,  to  do  away  with  this 
difficulty.  It  would  merely  transfer  the  entire  duty  of 
redemption  to  the  banks,  and  it  would  in  no  wise  prevent 
raids  upon  the  gold  reserve  of  these  institutions  in  case  of 
panic."  It  is  a  pleasure  to  see  such  sound  common  sense 
in  the  columns  of  the  Commercial,  for  the  danger  to  our 
business  interests  from  the  bank  note  currency  is  far 
greater  than  the  danger  of  free  silver  coinage  at  the  ratio 
of  sixteen  to  one. 

The  National  Banks  have  been  working  for  years  to 
undermine  our  money,  and  they  have  practically  four  thou- 
sand agencies  throughout  the  country  for  this  purpose. 

They   had  the  late  administration  under   control,  and 


26 

appear  to  be  not  without  influence  with  our  present  admin- 
istration. 

A  National  Bank  president  has  been  placed  at  the  head 
of  the  Treasury  Department,  and  the  policy  of  the  previous 
adminstration  has  so  far  been  continued. 

The  President's  currency  message  of  July  24,  1897,  was 
looked  forward  to  with  great  interest,  as  it  was  expected  to 
definitely  outline  the  policy  of  the  present  administration. 
The  message  was  a  disappointment,  in  so  far  as  it  showed 
the  present  administration  to  be  on  the  side  of  bank  cor- 
porations in  their  fight  against  the  interests  of  the  people. 
The  reference  to  the  Indianapolis  Convention  was  unfortu- 
nate, for  the  President's  inaugural  letter  appeared  to  have 
been  written  under  the  influence  of  the  National  Banks. 
The  letter  contains  these  words  : 

"The  several  forms  of  our  paper  currency  offer,  in  my 
judgment,  a  constant  embarrassment  to  the  Government, 
and  imperil  the  safe  balance  in  the  Treasury." 

It  should  be  borne  in  mind  that  under  the  act  of  1890 
the  several  forms  of  paper  money  became  equal  and  prac- 
tically one  issue.  By  "  the  safe  balance  in  the  Treasury," 
the  President  undoubtedly  meant  a  safe  reserve  in  the 
Treasury,  for  the  Government  fiscal  system  should  be 
separate  from  the  Government  monetary  system. 

The  money  under  the  act  of  1890,  being  all  equal,  a 
safe  reserve  has  been  imperiled  by  drawing  upon  the  mone- 
tary system  for  deficits  in  revenue,  and  further  by  creating 
doubt  in  the  minds  of  the  people,  on  the  part  of  the  late 
administration,  as  to  the  equality  of  all  Government  money. 

Another  influence  aided  to  imperil  the  reserve  was  the 
increase  of  National  Bank  note  currency  ;  also,  the  continued 
separation  of  the  gold  represented  by  gold  certificates  from 
the  amount  of  gold  held  by  the  Treasury  in  reserve. 

Under  the  law  of  1890  no  such  separation  should  have 
been  permitted  to  continue.  A  further  cause  was  the 
Government  deposits  in  National  Banks  while  revenue 
was  deficient.  The  money  so  deposited  was  the  proceeds 
of  sales  of  bonds. 

A  capable  Secretary  of  the  Treasury  would  have  been 
able  to  prevent  both  the  1893  and  1896  money  panics.  The 
currency  certificate  represented  another  agent  for  pro- 
ducing these  artificial  panics. 


27 

If  the  present  administration  would  treat  all  Govern- 
ment money  alike,  as  provided  for  under  the  laws  of  1890 
and  1893,  one  of  the  temptations  to  manipulate  our  money 
for  speculative  purposes  would  be  removed. 

While  the  reserve  of  $100,000,000  is  small,  the  Secretary 
of  the  Treasury  would  not  only  have  been  able  to  maintain 
it  against  all  attacks,  but  to  have  increased  it  without  ad- 
ditional legislation  or  the  issue  of  bonds. 

To  place  our  money  upon  an  enduring  basis,  not  subject 
to  easy  attack,  nor  its  stability  to  doubt  or  dispute,  the 
Executive  must,  as  a  first  step,  carry  out  the  spirit  ol  the 
law  of  1890,  and  permit  of  no  distinction  in  our  money. 
Pay  the  silver  dollar  in  gold  and  every  difficulty  is  over- 
come. 

The  St.  Louis  platform  declared  in  favor  of  our  present 
money — gold,  silver  and  paper,  as  expressed  in  the  law  of 
1890,  and  the  late  national  election  was  settled  on  this 
question.  A  party  advocating  the  retirement  of  the  green- 
backs and  the  placing  of  the  control  of  the  monetary  sys- 
tem into  speculative  hands,  through  our  national  banks, 
would  not  have  received  a  vote  equal  to  that  ol  the  Mug- 
wump party  of  Indianapolis. 

On  account  of  the  apparent  prejudice  of  the  President 
in  favor  of  the  National  Banks,  the  country  is  under  great 
obligation  to  our  Senate  for  having  declined  to  authorize 
the  monetary  commission,  which  commission  would  un- 
doubtedly have  been  one  favoring  the  National  Banks. 

The  Secretary  of  the  Treasury,  as  the  guest  of  one  of  the 
Assistant  Secretaries,  under  the  late  administration,  thought 
the  monetary  commission  "  an  open  forum  to  which  could 
be  admitted  every  contributive  suggestion,  from  all  classes 
and  conditions  of  men,"  and  further  stated :  "  If  there  is 
anything  dear  to  the  American  heart,  it  is  the  privilege  of 
having  his  say ;  give  him  his  say  in  court,  let  his  argument 
be  heard,  and  then,  if  the  jury  is  against  him,  he  rests  sat- 
isfied." 

The  Secretary  here  indicated  that  the  Bankers'  Com- 
mission could  listen  to  the  people,  give  them  their  say,  and 
then  act  for  their  own  interests.  This  is  the  nature  of  the 
commission  we  have  escaped  through  the  non-authorization 
by  the  Senate.  The  Secretary,  however,  has  not  lost  courage, 
but  says  that  that  which  might  have  been  accomplished 


28 

through  the  Congressional  Commission  may  be  achieved 
without  one  (no  doubt  referring  to  the  Indianapolis  effort). 
With  this  the  Secretary  dismisses  the  monetary  ques- 
tion, and  by  a  few  words  attempts  to  defend  industrial  cor- 
porations which  now  so  severely  oppress  our  country. 

A   PERFECT   MONETARY   SYSTEM. 

A  perfect  monetary  system  must  consist  of  gold,  silver 
and  paper,  all  possessing  equal  legal  tender  qualities,  and 
interchangeable  at  the  option  of  the  holder.  To  accom- 
plish this,  the  Government  must  have  absolute  control  over 
the  system.  A  prejudice  exists  upon  the  part  of  some 
against  paper  forming  part  of  the  currency,  but  this  pre- 
judice is  without  excuse,  as  under  all  circumstances  paper 
will  form  a  portion  of  the  circulating  medium  through 
bank  credits,  etc. 

To  exclude  paper  from  the  monetary  system  would 
place  unnecessary  obstacles  in  the  way  of  commerce.  As 
stated  before,  the  paper  portion  of  the  circulating  money 
must  at  no  time  exceed  the  limit  of  confidence  under  the 
most  trying  circumstances.  I  hold  that  the  United  States 
will  remain  within  the  safety  limit  by  issuing  paper  to  the 
extent  of  40%  of  the  whole  circulation,  this  paper  to  have 
an  authorized  underlying  bond  issue.  A  bond  bearing  a 
low  rate  of  interest,  say  2^\% ;  this  would  be  at  the  rate 
of  7  cents  per  day  for  $1,000. 

The  amount  of  this  paper  outstanding  to  be  entirely 
controlled  by  the  public,  except  as  to  the  extreme  limit  of 
40$,  and  a  further  restriction  in  case  the  gold  reserve  should 
be  less  than  20%.  The  metal,  silver  and  gold  in  the  mon- 
etary system  must  always  equal  at  least  60%  of  the  total. 
Under  the  operation  of  this  system,  it  may  be  safely  calcu- 
lated that  within  a  shorter  period  than  the  existence  of  the 
laws  which  created  our  present  silver  coinage,  the  entire 
amount  of  silver  will  be  practically  at  a  parity  with  gold. 

England's  great  advance  in  commerce  was  gained  under 
a  stable  monetary  system,  giving  her  every  advantage  at 
home,  and  by  a  fluctuating  currency  in  her  colonies,  as  well 
as  in  South  America  and  other  countries,  whose  trade  she 
has  practically  monopolized.  This  fluctuating  money  has 
been  to  the  advantage  of  England,  and  to  the  great  disad- 
vantage and  even  ruin  of  countries  trading  with  her. 


29 

The  United  States  has  had  a  currency  which  at  periods 
has  been  distrusted,  and  she  has  constantly  suffered  in  her 
commercial  relations  with  other  countries.  Creditor  na- 
tions, such  as  England,  Germany,  and  France,  have  derived 
advantages  over  us  through  our  fluctuating  money,  and  we 
have  suffered  the  losses. 

The  United  States  has  now  arrived  at  a  period  prepared 
to  enter  the  markets  of  the  world  against  the  older  nations 
of  Europe.  To  successfully  accomplish  this,  it  will  not 
only  be  necessary  that  our  money  shall  be  as  stable  as  that 
of  England,  but  we  must  present  to  countries  on  the  silver 
standard  a  system  by  which  the  disastrous  fluctuations  be- 
tween the  two  metals  may  be  avoided.  Such  a  system  will 
accomplish  more  towards  increasing  our  commerce  than 
a  proposed  international  bank,  a  proposition  entirely  im- 
practicable and  which  the  Government  should  not  encour- 
age. 

Apropos  of  this  subject,  the  Pio  Netvs  stated  lately  the 
opinion  that  "  the  United  States  had  better  first  produce 
the  merchant,  and  the  merchant  would  create  his  own 
banking  conveniences."  In  many  spheres  the  merchant  of 
the  past  cannot  be  found  to-day.  We  have  in  his  stead 
promoters  of  corporations,  less  engaged  in  the  pursuits  of 
commerce  than  in  schemes  to  foist  watered  stock  upon  the 
public. 

The  result  of  this  system  would  be  the  practical  unifica- 
tion of  the  two  money  metals.  Any  increased  demand  for 
silver  would  advance  the  price  of  silver,  and  so  benefit  the 
nations  whose  commerce  we  seek.  It  will  enable  these 
nations  to  adopt  the  same  money  standard  even  without 
gold,  and  thus  avoid  such  losses  as  the  depreciation  of 
silver  has  forced  upon  them. 

Mexico  and  other  countries  have  placed  bonds  in  Europe 
payable  in  gold,  for  which  they  received  silver,  then  on  a 
parity  with  gold.  To  satisfy  these  bonds  they  would  now 
have  to  pay  more  than  double  the  quantity  of  silver  received 
therefor.  England  would  soon  feel  the  result  of  this  system 
in  the  loss  of  her  gold,  and  to  protect  her  gold  reserve  she 
will  find  herself  compelled  to  adopt  this  system  in  place  of 
her  present  policy. 

The  low  price  that  the  farmer  has  received  for  his 
wheat,  at  times,  has  been   caused  by  the  competition  from 


3Q 

wheat-exporting  countries  on  the  fluctuation  silver  or  paper 
money  standard.  In  many  commercial  countries  a  prejudice 
in  favor  of  silver  exists,  which  makes  this  silver  worth 
more  at  home  than  in  the  markets  of  the  world,  enabling 
the  producer  of  grain  to  compete  against  our  farmers  to 
an  unnatural  extent.  The  same  holds  true,  also,  to  a  greater 
or  lesser  extent,  of  exporting  countries  on  the  paper  basis. 
The  paper  not  fluctuating  or  depreciating  in  the  interior  in 
comparison  to  the  variations  of  exchanges  in  their  own 
commercial  center. 


3i 


FROM  THE  NEW  YORK  "TRIBUNE,"  BY 

G.  R.  HORR. 

I  believe  in  the  use  of  gold  and  silver  as  money  to  the 
fullest  extent  that  can  be  done  on  sound  money  principles. 
I  believe  that  both  gold  and  silver  are  the  natural  money  of 
the  world.  That  in  all  transactions  of  the  nations  of  the 
world,  the  two  metals  should  be  used  in  the  settlement  of 
balances,  but  only  at  their  commercial  value. 

I  would  have  the  money  that  measures  value  the  most 
stable  that  can  be  devised.  I  hope  some  day  the  business 
men  of  the  world  would  get  together  and  fix  upon  some  plan 
whereby  we  could  use  both  metals  as  the  money  of  redemp- 
tion. I  am  clearly  of  the  opinion  that  both  gold  and  silver 
should  be  used  as  money  of  ultimate  redemption. 

The  people  of  the  world,  the  business  men  of  all  nations, 
should  have  treated  the  subject  with  some  common  sense 
and  thus  avoid  all  this  long  and  bitter  controversy.  We 
should  use  some  common  sense  now. 

It  does  seem  to  me  that  some  plan  should  be  devised  to 
use  both  silver  and  gold  as  the  money  of  ultimate  redemp- 
tion. They  have  been  used  in  that  way  in  the  past  ages  by 
changing  the  ratio  from  time  to  time  as  the  real  value  of 
the  two  metals  made  the  change  necessary.  I  will  do  all  in 
my  power  to  reach  such  a  result.  I  very  much  desire  to 
have  silver  restored  to  its  position  as  money  of  ultimate  re- 
demption. I  would  have  some  new  ratio  agreed  upon 
which  as  nearly  as  possible  shall  be  placed  upon  the  real 
intrinsic  value  of  the  two  metals.  I  would  seek  a  ratio 
which  the  business  men  of  the  world  will  accept  as  being 
fair  and  honest. 


32 

TO    THE    ADVOCATES    OF    FREE   COINAGE   OF 
SILVER  AT  THE  RATIO  OF  16  TO  i. 

The  Luttgen  Monetary  System  being-  submitted  to  you 
as  a  scientific  and  final  solution  of  the  money  problem,  it 
remains  now  to  point  out  to  you  the  advantages  of  this 
system  over  the  plan  of  free  coinage  of  silver  at  the  ratio 
of  16  to  i  which  you  propose. 

The  past  monetary  history  of  the  United  States,  without 
referring  to  that  of  other  nations,  will  convince  you  that  the 
fluctuations  between  the  two  metals  do  not  admit  of  the 
concurrent  circulation  of  silver  and  gold,  except  at  the 
moment  when  they  may  cross  or  recross  each  other  in  their 
fluctuating  values.  It  was  these  fluctuations  that  caused 
the  demonetization  of  silver,  as  the  development  of  com- 
merce and  close  competition  found  an  insurmountable  dis- 
turbing element  in  the  monetary  plan.  You  believe  that 
the  free  coinage  at  16  to  i  will  advance  the  value  of  silver 
to  a  parity  with  gold.  The  experience  of  the  past  does  not 
indicate  anything  to  base  such  a  supposition  upon  ;  but  the 
advance  of  silver  to  a  parity  with  gold  without  remaining 
absolutely  stationary  would  be  of  no  benefit.  It  would 
cause  a  limping  standard  whose  instability,  as  in  the  past, 
would  keep  the  commerce  of  any  nation  at  a  disadvantage. 

If  silver  should  not  advance  to  the  value  of  16  to  i,  the 
United  States,  with  free  coinage  of  silver  at  this  ratio, 
would  be  on  the  silver  basis,  and  isolated  from  the  leading 
commercial  nations,  the  same  as  South  America,  Mexico, 
etc. 

It  is  not  my  intention  to  enter  into  the  disadvantages  of 
the  silver  basis,  but  to  confine  myself  rather  to  the  effect 
such  a  silver  basis  would  have  upon  the  value  of  silver. 
The  demand  of  silver  for  a  currency  basis  would  be  very 
limited,  and  the  system  would  not  encourage  other  nations 
to  adopt  the  silver  standard ;  but,  on  the  contrary,  the 
abandonment  of  gold  by  ourselves  would  enable  other 
nations  to  enter  upon  the  gold  standard,  and  our  money 
would  be  subject  to  still  greater  manipulations  on  the  part 
of  our  foreign  creditors.  Silver  cannot,  therefore,  be 
expected  to  advance  permanently  much  beyond  its  present 
price ;  while  on  the  other  hand,  the  Luttgen  Monetary 
System  would  give  to  silver  the  character  of   gold,  create 


33 

an  unlimited  demand  for  silver,  make  it  a  money  metal  for 
settlements  of  balances  with  other  nations,  and  avoid  the 
instability  in  our  money  which  would  naturally  exist 
through  the  so-called  free  coinage  of  silver.  The  entire 
stock  of  silver,  together  with  all  that  the  mines  may  be  able 
to  produce,  would  become  an  active  circulating  medium  in 
every  nation  of  the  world.  Its  value  would  probably 
advance  in  course  of  time  beyond  the  ratio  of  16  to  I. 

An  international  agreement  would  not  accomplish  any 
more  for  silver  than  the  free  coinage  of  silver  by  the  United 
States.  It  would  leave  silver  in  the  position  of  a  subsidiary 
money.  To  benefit  our  money,  silver  and  our  extensive 
mining  interests,  silver  must  be  placed  upon  the  basis  of 
money  of  final  redemption. 

You  understand  by  the  free  coinage  of  silver  a  promis- 
cuous presentation  of  unlimited  silver  bullion  to  the  Gov- 
ernment and  receiving  therefor  silver  coin  in  exchange. 
Such  a  policy  would  undoubtedly  place  the  United  States 
upon  a  monometallic  silver  standard,  and  yet  the  capacity 
of  the  mints  would  necessarily  regulate  or  limit  the  amount 
of  silver  the  Government  would  be  prepared  to  take.  When 
this  limit  would  be  full,  silver  bullion  would  necessarily 
decline,  and  thus  another  source  of  instability  would  be 
forced  upon  the  people. 

It  should  not  be  difficult  for  you  to  recognize  the  disad- 
vantages of  such  a  course,  nor  should  you  fail  to  recognize 
the  advantages  of  the  scientific  Luttgen  Monetary  System, 
which  system  would  subject  silver  to  no  disadvantages 
whatever.  It  will  encourage  the  price  of  silver  in  various 
ways,  fully  explained  in  the  body  of  this  work ;  but  it  may 
be  well  to  state  here  that  the  silver  delivered  to  the  Gov- 
ernment cannot  be  withdrawn  from  the  Government  at  a 
lower  valuation.  The  Government  would  admit  silver  into 
the  monetary  system,  practically  at  all  times,  but  pay  out 
silver  only  on  an  advancing  silver  market. 

One  of  the  greatest  drawbacks  of  free  silver  coinage 
would  be  that  the  entire  stock  of  silver  now  in  the  hands  of 
the  Government  would  at  once  be  in  the  market  at  the  then 
existing  price  of  silver  bullion,  through  which  not  alone 
the  Government  would  lose  heavily,  but  the  people  as  well. 
Free  coinage  is  not  necessarily  that  which  is  now  most  generally 
understood  by  the  public,  but  is  the  coinage  of  silver  bullion  into 


34 

money  without  coinage  charges  by  the  Government,  and  without 
the  Government  deriving  any  seigniorage  therefrom. 

My  system  provides  for  a  uniform  daily  quantity  of  sil- 
ver to  be  admitted  into  the  currency  at  the  market  value ; 
in  other  words,  the  owner  of  silver  will  receive  full  value 
therefor  in  coin,  and  he  will  further  have  the  privilege  of 
exchanging  this  silver  coin  if  he  so  prefers  into  gold  coin  or 
legal  tender  notes. 

By  the  Constitution,  the  right  to  coin  money  is  strictly 
limited  to  the  National  Government.  To  coin  money  must 
be  interpreted  in  a  broader  sense  to  mean  that  the  power  to 
create  money  is  confined  to  the  National  Government. 
Money  in  modern  times  and  for  the  conveniences  of  mod- 
ern commerce  must  necessarily  consist  of  gold,  silver  and 
paper.  The  power  to  issue  paper  money  should  not  be 
conferred  upon  any  corporation  or  any  of  the  States  of  our 
Union. 

All  money  issued  by  the  Government  in  denominations 
of  $i  or  multiple  thereof,  whether  in  gold,  silver  or  paper, 
must  at  all  times  be  exchangeable  at  the  pleasure  of  the 
holder  ;  and  when  so  exchangeable,  be  legal  tender  to  any 
amount. 

A  fluctuating  money,  varying  in  value  from  that  of  the 
leading  commercial  nations,  represents  a  constant  drain  or 
tax  for  the  benefit  of  foreign  nations.  Even  India  has  re- 
cently declined  to  resume  the  free  coinage  of  silver,  having, 
under  a  system  similar  to  our  own,  enjoyed  comparative 
stability  in  her  exchanges. 

The  evils  of  monometallism  have  been  fully  demon- 
strated in  the  case  of  panics.  To  illustrate  the  disad- 
vantages of  one  country  having  one  standard,  another 
country  another  standard,  it  is  stated  that  during  the  panic 
of  1847,  in  London,  it  was  not  possible  to  borrow  a  guinea 
on  sixty  thousand  pounds  of  coined  silver,  and  in  the 
panic  of  1864,  in  Calcutta,  a  possessor  of  twenty  thousand 
pounds  in  gold  coin  was  obliged  to  declare  himself  insolvent 
because  he  could  not  raise  a  single  rupee  on  this  gold. 
Such  a  condition  could  not  exist  under  this  system.  Both 
metals  will  attain  a  concurrent  circulation  over  the  entire 
world,  and  will  be  beyond  the  control  of  future  legislation. 
The  system  will  absorb  all  silver  that  may  be  produced, 
but  will  in  no  manner  interfere  with  its  market  value.     It 


35 

will  limit  neither  silver  nor  gold  to  any  fixed  ratio.  This 
system  "  does  nothing  for  silver,''  for  it  recognizes  silver  as 
an  essential  part  of  stable  money. 

Under  this  system  our  mining  industries  will  become 
more  active  than  at  any  former  period.  Silver  will  have  a 
more  stable  value,  and  will  be  no  longer  influenced  by  the 
coinage  laws  of  an)7  nation. 

My  system  will  permit  the  Government  to  at  once 
resume  the  purchase  of  180,000  ounces  of  silver  per  day  as 
a  tentative  amount ;  this  would  represent  54,000,000  per 
annum  as  the  law  of  1890  provided.  This  silver  is  in  reality 
not  purchased,  but  admitted  into  the  currency  and  coined 
as  provided  for  under  this  system. 

A  certain  Chicago  publication  largely  circulated  during 
and  prior  to  the  Presidential  campaign  of  1896,  and  a  work 
which  was  claimed  to  represent  the  silver  interests,  acknowl- 
edged that  the  free  coinage  of  two  metals  is  impracticable, 
and  proposes  to  change  the  weight  of  the  gold  dollar  in 
accordance  with  the  fluctuations  of  silver.  This  proposition 
would  not  only  act  against  silver,  but  be  detrimental  to  all 
industries.  As  we  are  at  present  on  the  gold  standard, 
such  a  change  would  be  repudiation  of  a  portion  of  all  ex- 
isting indebtedness. 

The  Constitution  provides  for  the  coinage  and  regula- 
tion of  money,  but  does  not  justify  the  repudiation  of  debts. 
The  appreciation  of  gold  will  be  more  completely  checked 
or  counteracted  by  this  system  than  by  the  coinage  of  silver 
at  the  fixed  ratio  of  16  to  1. 

Adopt  the  system  that  will  enable  you  to  offer  to  your 
opponents  gold  whenever  wanted  and  you  will  succeed  in 
benefiting  silver  and  the  mining  industries  more  than  by 
any  other  method.  The  Luttgen  Monetary  System  pro- 
vides practically  for  the  free  coinage  of  silver  under  the 
gold  unit  of  our  present  dollar. 

Several  international  conferences  have  been  held  for  the 
purpose  of  remonetizing  silver,  but  this  is  not  an  inter- 
national question.  If  we  have  a  coinage  equivalent  to  its 
bullion  value,  and  the  ratio  between  the  two  metals  regu- 
lated by  their  bullion  value,  we  have  a  coin  that  will  be 
acceptable  throughout  the  world,  and  be  more  international 
than  any  fiat  can  make  it. 

It  is  with  money  as  it  is  with  our  produce ;  a  bushel  of 


36 

wheat  weighing  sixty  pounds  will  find  favor  throughout 
the  world.  Its  quality  makes  it  acceptable.  In  the  same 
manner  the  quality  of  our  silver  dollar  must  make  it  accept- 
able to  our  creditors  abroad.  Any  international  scheme 
that  England  would  enter  into  would  be  to  the  disadvant- 
age of  the  United  States,  for  it  would  be  found  to  embody 
a  certain  responsibility  to  cover  the  fluctuations  of  our 
silver. 

The  experiment  of  the  Latin  Union  was  an  absolute 
failure.  When  the  time  arrived  when  this  Union  should 
have  proved  its  advantages,  it  absolutely  failed. 


37 


TO  THE  GOLD  MONOMETALLISTS. 

This  system  will  establish  the  gold  standard  on  the  most 
permanent  basis.  It  will  be  supported  by  silver  of  intrinsic 
value,  and  will  make  it  practical  for  the  Government  to 
issue  its  notes  payable  in  gold  or  silver  at  the  pleasure  of 
the  holder. 

The  outstanding  Government  bonds,  by  the  bond  trans- 
action of  February,  1895,  have  been  declared  to  be  payable 
in  standard  coin  and  not  in  gold.  The  consideration  of 
$16,174,770,  which  the  Government  granted,  established  this 
fact  beyond  all  practical  power  of  future  legislation.  The 
Government  to-day  would  have  the  right  to  pay  these 
bonds  at  maturity  in  silver,  a  right  that  cannot  be  contested, 
but  it  would  not  be  good  policy. 

To  avert  such  a  danger,  you  will  recognize  the  neces- 
sity of  perfecting  our  bimetallic  system  of  currency  in  a 
manner  to  enable  the  Government  at  all  times  to  pay  the 
silver  dollar  in  gold.  When  the  silver  dollar  is  payable  in 
gold,  the  question  of  the  payment  of  the  Government  bonds 
does  no  longer  exist.  Further  advantages  of  the  con- 
current circulation  of  both  metals  will  be  found  in  our 
relations  with  South  American  countries.  We  would  aid 
them  in  arriving  at  a  stable  exchange  without  the  use  of 
gold  in  their  monetary  systems.  The  business  with  these 
countries  will  be  of  greater  importance  to  the  United  States 
than  the  business  of  any  other  section  of  the  world  con- 
tested by  the  commercial  nations  of  Europe,  and  by 
means  of  a  monetary  system  that  will  offer  a  stability  to  the 
exchanges  with  these  countries,  they  would  make  New 
York  their  bankers  and  create  here  a  financial  center  of  the 
world. 


389253 


38 


FROM    THE    "EVENING   POST,"    FEBRUARY   26, 

1891. 

We  have  received  from  Mr.  Frederick  Wm.  Luttgen  of 
this  city  a  plan  for  a  "  supplementary  silver  coinage."  The 
plan  has  been  copyrighted.  He  begins  by  showing  that  it 
is  impossible  for  one  nation,  or  even  for  an  international 
conference,  to  maintain  a  fixed  ratio  of  1  to  16  between 
silver  and  gold,  or  any  other  ratio.  '  This  is  no  more  in 
their  power,"  says  Mr.  Luttgen,  "  than  it  is  in  their  power 
to  regulate  the  weather."  Here  we  agree  with  Mr.  Luttgen 
perfectly,  and  we  congratulate  him  on  the  felicity  of  his 
expression.  He  proposes  that  the  coinage  ratio  be  changed 
whenever  necessary  so  as  to  correspond  with  the  market 
ratio  of  the  preceding  twelve  months.  If,  for  example,  the 
market  ratio  for  the  past  twelve  months  has  been  1  to  19, 
let  the  coinage  ratio  for  the  next  year  be  1  to  19.  Then 
the  Government  should  purchase  silver  bullion  daily.  The 
thing  in  Mr.  Luttgen's  plan  that  strikes  us  favorably  is  the 
proposition  to  make  the  coinage  ratio  correspond  with  the 
market  ratio  and  to  keep  it  there.  The  cost  of  recoinage 
would  be  a  very  small  price  to  pay  for  deliverance  from  the 
dangers  we  are  exposed  to.  It  would  be  a  very  small  price 
to  pay  for  the  privilege  of  getting  back  to  honest  ways  and 
truth-telling  in  our  monetary  system. 


PART    II. 


THE  LUTTGEN  MONETARY   SYSTEM. 

In  presenting  to  the  public  a  natural  solution  of  the 
monetary  errors  of  the  past,  the  author  fully  realizes  that 
this  solution  will  meet  at  first  with  opposition  from  the  gold 
monometallists  who  desire  the  appreciation  of  the  metal  by 
which  their  wealth  is  measured,  and  with  the  opposition  of 
the  banks  who  have  been  struggling  to  control  the  mone- 
tary system  of  the  country. 

The  gold  monometallists  will  find  this  system  ultimately 
to  their  advantage,  and  the  author  has  endeavored  to  re- 
move the  opposition  on  the  part  of  the  banks  to  an  honest 
and  stable  money  by  affording  them  opportunities  for 
profit  without  expense  to  the  Government  or  the  people. 

The  author  does  not  ask  these  opponents  for  their  judg- 
ment any  more  than  the  discoverer  of  steam  power  should 
have  consulted  the  nurser  of  draft  oxen,  or  the  inventor  of 
the  electric  light  have  asked  an  opinion  from  the  manufac- 
turer of  tallow  candles.  The  author,  however,  respectfully 
submits  the  system  to  the  thinking  public. 

The  system  creates  a  method  by  means  of  which  the 
concurrent  circulation  of  gold  and  silver  is  effected.  The 
system  creates  of  these  two  metals  one  primary  money  upon 
a  fixed  gold  unit  standard,  and  enlarges  the  measure  of 
value  through  an  increased  subsidiary  money  upon  which 
credits  are  issued. 

The  system  removes,  as  relating  to  commerce,  all  fluctu- 
ations between  these  two  metals  when  used  as  money,  and 
after  being  adopted  by  a  single  commercial  nation  will, 
within  a  short  period,  establish  one  universal  standard 
throughout  the  world. 

This  system  will  forge  itself  forward  ;  when  once  made 
known  it  will  not  stop  until  it  encircles  the  earth  ;  that 
which  benefits  mankind  will  continue  to  spread  like  Christi- 
anity.    Limited  as  the  present  publication  may  be,  it  will 


40 

undoubtedly  arouse  limitless  commentators,  for  volumes 
cannot  describe  the  benefits  of  this  system. 

Nations  have  attempted  for  centuries  to  legislate  against 
Nature  in  the  use  of  the  money  metals,  but  the  world  is 
about  ready  to  acknowledge  its  defeat  and  recognize  the 
greater  power  of  the  laws  of  Nature.  A  few  men,  intelli- 
gent in  ordinary  affairs,  still  believe  that  a  combination  of 
nations  can  overthrow  the  laws  of  our  Creator ;  however, 
time  will  also  prove  to  them  their  hallucinations,  and  it  is 
to  be  hoped  that  their  opinions  will  not  influence  a  further 
delay  of  the  introduction  of  a  system  obedient  to  Nature. 

A  student  of  the  money  question,  in  his  search  for  a  true 
monetary  system  that  would  overcome  all  errors  and  short- 
comings, undertakes  a  difficult  task.  He  has  not  the  ordi- 
nary encouragement  that  meets  the  inventor  by  whose 
single-handed  efforts  his  invention  is  put  into  operation  and 
perfected  ;  but  the  student  of  this  question,  if  his  sacrifice 
of  time  has  been  rewarded  by  a  complete  solution,  has  to 
begin  his  work  anew  in  combating  selfish  opposition. 
The  solution  of  the  world's  money  problem  must  meet 
every  want  in  the  present  system,  and  must  consist  of 
one  money  only. 

The  system,  as  applied  to  the  United  States,  introduces 
no  new  experiments,  changes  none  of  the  laws  heretofore 
enacted,  but  merely  the  mechanical  execution  of  the  same. 
It  will  turn  our  present  imperfect  system  into  the  most 
perfect  and  safe  monetary  system  of  the  world. 

England  has  refused  to  join  in  a  bimetallic  agree- 
ment, but  when  this  system  is  in  full  operation  in  this 
country,  England  will  find  herself  compelled  to  adopt  the 
same,  and  this  without  any  solicitation  on  our  part. 

No  bimetallic  plan  would  be  perfect  that  does  not  lead 
to  one  money.  The  Huskisson  proposition,  which  was 
reported  to  have  been  favored  by  Mr.  Wolcott,  would 
create  a  separate  money  having  nothing  in  common  with 
the  gold  unit,  and  would  not  create  a  non-fluctuating  re- 
serve for  credit  money.  A  plan  which  has  been  proposed 
from  time  to  time,  and  sometimes  called  the  Windom  plan, 
represents  a  wild  scheme  under  which  speculators  could,  at 
will,  draw  from  the  Government  money  that  had  been  paid 
by  the  people  in  taxes.  This  system,  however,  overcomes 
all  difficulties.     It  uses  both  metals,  creates  one  money  and 


41 

protects  the  Government  from  loss.  No  combination  of 
capital  could  make  an  impression  upon  this  system  for 
speculative  purposes  under  any  condition  whatever. 

By  the  interference  on  the  part  of  European  rulers  in 
the  struggle  between  Greece  and  Turkey,  they  have  checked 
the  progress  of  Christianity,  but  these  rulers,  notwithstand- 
ing all  their  power,  will  be  compelled  to  accept  this  system, 
and  when  once  put  in  practice  in  the  United  States,  their 
power  will  be  insufficient  to  oppose  it  any  more  than  they 
could  stop  the  revolution  of  the  earth  on  its  axis. 

All  monetary  plans  heretofore  proposed  have  been  im- 
perfect; as,  for  instance,  Mr.  Windom  proposed  to  suspend 
the  receipt  or  purchase  of  silver  bullion  when  speculative 
combinations  should  give  an  arbitrary  price  to  silver. 

Not  a  single  perfect  system  has  been  formulated.  The 
various  bills  now  before  Congress  and  other  propositions 
made  public  are  all  defective  to  such  an  extent  as  would 
endanger  our  monetary  system  at  some  period.  The  author, 
therefore,  takes  great  pride  in  presenting  a  monetary  plan 
perfect  in  every  detail ;  a  monetary  plan  which  will  not 
alone  give  us  a  stable  money,  but  a  plan  which  will  bring 
all  nations  of  the  world  upon  a  uniform  standard. 

It  has  frequently  been  stated  by  economists  that  its 
teachings,  when  in  conflict  with  private  gains,  are  repu- 
diated. This  does  not  apply  to  the  monetary  system,  for 
a  perfect  system  has  not  heretofore  been  proposed.  A 
partial  plan,  although  based  upon  correct  theories, 
would  represent  only  a  makeshift  and  not  worthy  of 
adoption. 

The  author  does  not  hesitate  to  predict  that  this  plan 
(covering  the  entire  field),  if  not  accepted  by  the  present 
Administration,  will,  however,  become  the  party  issue  of 
19CO,  and  any  candidate  qualified  to  receive  the  nomination 
of  one  of  the  great  parties  will  be  overwhelmingly  elected 
on  a  platform  embodying  this  monetary  plan. 

The  action  of  the  banks  to  secure  circulation  is  a  bold 
game  of  bluff.  Their  argument  is  unsound  ;  for  instance, 
the  statement  that  the  issuing  of  notes  represents  banking,  or 
that  the  reserve  must  be  protected  by  manipulation  of  the 
interest  rates.  Referring  to  the  Bank  of  England,  we  find 
the  Issuing  Department  entirely  separate  from  the  Banking 
Department,  and  in  no  manner  considered   banking.     We 


42 

find  also  that  the  Bank  of  England  regulates  its  rate  of  dis- 
count to  protect  its  reserve  against  deposits,  and  not 
against  note  issue.  This  is  the  common  practice  with  every 
one  of  our  bankers  ;  when  their  money  runs  low,  they  ad- 
vance the  rate  of  discount. 

Under  this  system  there  will  be  no  inconvertible  money. 
The  $200,000,000  of  uncovered  Greenbacks  will  have  an 
underlying  bond  bearing  interest  at  2.555  Per  cent.,  and  the 
outstanding  note  issue  against  Government  bonds  will  de- 
pend entirely  upon  the  wishes  of  the  public  at  large. 

Theorists  as  well  as  parties  interested  in  the  National 
Banks  have  taken  pleasure  to  denounce  the  Greenbacks  as 
irredeemable  money.  This  is  on  a  par  with  other  false- 
hoods relating  to  our  existing  currency.  The  Greenbacks 
are  no  more  an  irredeemable  money  than  the  notes  of  the 
Bank  of  England,  which  are  also  only  partially  secured  by 
gold  deposits. 

The  question  of  bank-note  issue  is  one  of  even  greater 
inportance  than  the  question  of  a  fixed  ratio  for  silver, 
which  was  before  the  public  in  1896;  whether  this  question 
was  forced  before  the  public  by  the  moneyed  interests  of 
the  East  or  by  the  silver  advocates  of  the  West  remains  in 
doubt. 

This  system  may  be  compared  with  Columbus'  discov- 
ery of  America.  When  Columbus  persistently  sailed  west- 
ward and  finally  discovered  this  continent,  had  any  other 
navigator,  with  like  perseverance,  followed  the  same  course, 
he  would  have  discovered  America,  and  no  other  continent. 
So  it  is  with  the  solution  of  this  monetary  question.  It  any 
student  of  political  economy  had  given  the  same  persever- 
ance to  this  study  which  the  author  has  given  the  same,  he 
would  have  discovered  the  same  system,  and  no  other. 
It  is  based  strictly  on  the  laws  of  Nature  and  fills  every  want. 

The  author  undertook  this  task  upon  the  basis  that  there 
is  a  solution  to  every  problem  which  may  present  itself,  and 
felt  satisfied  that  the  solution  would  be  of  more  benefit 
to  every  individual  being  than  any  work  heretofore  of  any 
one  man. 

For  perspicuity  the  author  presents  this  system  in  the 
form  of  a  rough  draft  of  a  bill,  and  also  for  the  purpose  of 
providing  for  the  necessary  regulations  to  make  this  system 
operative. 


43 

A  Bill  for  the  regulation  of  the  coinage  of  gold  and  silver 
in  accordance  with  the  Luttgen  Monetary  System  (copy- 
righted) to  create  for  the  United  States  as  a  permanent 
policy  a  practical  bimetallic  money  based  upon  the  present 
gold  unit  of  value  standard,  for  the  separation  of  the  issuing 
department  from  the  fiscal  department  of  the  Government, 
for  the  control  of  National  Bank  note  circulation  by  the 
Government,  for  the  authorization  of  an  underlying  bond 
for  all  outstanding  circulation  not  covered  by  either  gold 
or  silver  at  cost,  for  the  refunding  of  the  National  Debt,  for 
the  unification  of  the  currency,  for  the  issuing  of  circulating 
notes  to  the  general  public  in  exchange  for  United  States 
bonds,  for  the  purpose  of  securing  to  the  people  a  stable 
money  beyond  control  of  manipulation,  and  the  advantages 
accruing  from  the  necessary  issue  of  circulating  promissory 
notes  against  deposits  of  bonds,  for  the  purpose  of  recover- 
ing the  losses  on  the  silver  now  held  by  the  Government, 
for  the  purpose  of  furthering  our  foreign  commerce  by 
offering  a  stable  rate  of  exchange  to  all  nations  whether  using 
gold  or  silver  as  money,  for  the  purpose  of  authorizing  the 
Secretary  of  the  Treasury  to  issue  "  short  time  ''  provisional 
bonds  for  deficits  of  revenue,  and  for  other  purposes.* 

Be  it  enacted  by  the  Senate  and  House  of  Representa- 
tives of  the  United  States  of  America,  in  Congress  assembled, 
that  the  monetary  or  issue  department  of  the  Government 
be  separated  from  its  fiscal  department,  and  that  $100,000,000 
of  the  gold  now  in  the  Treasury  be  withdrawn  from  the 
general  account  and  set  aside  as  representing  $100,000,000 
of  Government  outstanding  circulating  notes.t 

Sec.  2.  That  it  is  the  established  policy  of  the  United 
States  to  maintain  both  gold  and  silver  as  money  of  final  re- 
demption on  the  present  gold  unit  of  value  of  25.8  grains  of 
standard  gold  under  the  provisions  of  the  Luttgen  Monetary 

*  This  bill  would  go  very  far  towards  alleviating  the  hardships  of  the 
producing  or  laboring  classes.  The  manipulation  of  the  monetary  system 
and  the  growth  of  corporations  is  the  cause  of  the  presence  of  the  all-per- 
vading social  question  which,  unless  solved,  will  shake  the  very  foundation 
of  our  Government.  To  surrender  the  control  of  our  monetary  system  to 
the  banks  is  equivalent  to  abandoning  our  rights  of  suffrage  to  a  few  men 
The  control  of  the  monetary  system  would  give  greater  power  than  any 
laws  that  Congress  could  enact,  but  this  bill  will  render  powerless  any 
combination,  however  great,  to  control  the  monetary  system  in  the  slightest 
degree. 

fBy  the  act  creating  the  $100,000,000  reserve,  the  issue  department 
was  practically  separated  from  the  fiscal  department,  although  this  has  not 
been  done  in  form. 


44 

System,  and  that  the  Secretary  of  the  Treasury  prepare  a 
treasury  note,  payable  on  demand  at  pleasure  of  holder,  in 
gold  of  the  present  standard  or  in  silver  of  the  standard 
existing  as  provided  for  under  said  system,  when  such  pay- 
ment may  be  demanded.  Such  note  to  be  of  full  legal 
tender  quality  as  long  as  so  redeemable  by  the  Govern- 
ment, and  said  note  to  be  of  such  form  and  of  such  denom- 
inations, not  less  than  one  dollar  or  more  than  one  thousand 
dollars,  as  the  Secretary  of  the  Treasury  may  prescribe, 
governed  by  demand,  and  a  sum  sufficient  to  carry  into 
effect  the  provisions  of  this  Act  is  hereby  appropriated  out 
of  any  money  in  the  Treasury  not  otherwise  appropriated, 
and  that  said  notes  as  soon  as  the  same  can  be  prepared 
shall  be  issued  as  follows: 

First.— In  exchange  of  all  legal  tender  notes,  silver  cer- 
tificates, gold  certificates,  currency  certificates  and  treasury 
notes. 

Second. — Against  deposits  of  gold. 

77;Zy^._Against  the  purchases  of  silver  as  provided  for 
in  Sections  10,  n  and  12  of  this  bill. 

Fourth.— Against  the  deposit  of  bonds  by  the  public  as 
provided  for  in  Section  16  of  this  bill. 

Fifth. — Against  silver  dollars  circulating  within  the 
United  States. 

Sixth. — For  subsidiary  coin,  and  that  when  redeemed 
the  same  may  be  reissued  as  here  provided  for;  but  no 
greater  amount  of  such  notes  shall  be  outstanding  at  any 
time  than  the  par  value  of  bonds  deposited  with  the  issue 
department  of  the  Government,  and  gold  coin  and  gold 
bullion  and  the  silver  at  cost.* 

Sec.  3.  That  all  legal  tender  notes,  gold  certificates, 
silver  certificates,  currency  certificates  and  treasury  notes, 

*This  law  would  carry  into  practical  effect  beyond  misconstruction 
the  provision  of  the  Laws  of  1890,  of  "  it  being  the  established  policy  of  the 
United  States  to  maintain  the  two  metals  upon  a  parity  with  each  other  on 
the  present  legal  ratio,  or  at  such  ratio  as  may  be  provided  by  law,"  and 
also  the  declared  policy  of  the  United  States  under  the  Law  of  1893,  to 
"  insure  the  maintenance  of  the  parity  in  value  of  the  coins  of  the  two 
metals,  and  the  equal  power  of  every  dollar  at  all  times  in  the  markets  and 
in  the  payments  of  debts. 

The  system  will  create  one  money  in  form,  which  nominally  already 
exists  under  the  Law  of  1 890,  and  relieve  the  banks  of  the  care  of  main- 
taining this  or  that  kind  of  money  as  a  reserve,  for  the  further  provisions  of 
this  bill  will  enable  the  Government  to  pay  out  at  all  times  whatever  money 
may  be  preferred  by  its  creditors. 


45 

when  received  by  the  Government,  whether  by  its  fiscal 
department  or  issue  department,  shall  be  cancelled  by  the 
issue  department,  and  notes  as  provided  for  in  Section  2 
substituted  therefor.  That  during  the  process  of  exchange 
of  said  notes,  no  distinction  shall  be  made  in  any  of  the 
existing  circulating  notes  of  the  Government,  and  that  the 
same  shall  be  considered  to  all  intents  and  purposes  as 
already  exchanged  for  such  new  notes.  That  the  legal 
tender  notes,  as  provided  for  in  Section  2,  gold  coin,  silver 
coin  and  subsidiary  coinage  shall  at  all  times  be  inter- 
changeable at  pleasure  of  holder.* 

Sec.  4.  That  a  bond  be  authorized  to  the  extent  of 
$200,000,000,  bearing  interest  at  2.555  per  cent,  payable  in 
twenty  years,  and  that  a  further  amount  be  authorized  to 
the  extent  of  any  Greenbacks  that  may  be  exchanged 
under  Section  3,  after  $300,000,000  of  the  outstanding 
Greenbacks  have  been  exchanged  as  provided  for,  and  that 
a  further  additional  amount  be  authorized  to  the  extent  of 
the  seigniorage  on  existing  silver  coinage  which  may  have 
been  covered  into  the  treasury,  and  a  further  amount  to 
cover  seigniorage  on  all  existing  subsidiary  coinage.f 

Sec.  5.  That  the  bonds  provided  for  in  Section  4  may 
be  issued  and  exchanged  at  the  pleasure  of  the  public  for 
any  of  the  outstanding  currency,  whether  Greenbacks, 
gold  certificates,  silver  certificates,  currency  certificates, 
treasury  notes,  coin  or  the  new  legal  tender  treasury  notes 
authorized  in  Section  2.  These  bonds  to  be  so  exchanged 
at  par  and  accrued  interests.^: 

*  This  simply  carries  out  the  spirit  of  the  Law  of  1890,  which  has  here- 
tofore been  ignored.  No  discriminations  must  be  made  in  any  of  the  circu- 
lation, and  the  Government  must  receive  either  in  payment  of  duties,  etc., 
and  the  issue  department  will  at  all  times  be  ready  to  furnish  gold  when 
necessary  vs.  any  money  the  fiscal  department  may  receive. 

t  This  bond  was  practically  authorized  under  the  Redemption  Law 
of  1875  .  Under  that  law  the  holder  of  the  Greenbacks  has  the  privilege  of 
demanding  gold,  necessitating  the  issue  of  bonds  when  so  demanded.  The 
proposition  now  is  to  execute  these  bonds  and  to  hold  them  in  the  treasury 
of  the  issue  department  of  the  Government  subject  to  exchange  and  re-ex- 
change with  the  outstanding  circulation. 

The  issue  of  bonds  for  the  seigniorage  covered  into  the  Treasury  is 
simply  a  common  act  of  honesty  and  necessary  for  the  purpose  of  increas- 
ing our  primary  or  redemption  money.  The  section  is  so  drawn  that  no 
bonds  shall  be  issued  for  any  of  the  Greenbacks  destroyed  or  lost. 

%  This  will  have  the  tendency  of  maintaining  the  rate  of  interest  at 
not  less  than  about  2f  per  cent.  The  extreme  fluctuations  of  interest  are 
no  advantage  to  borrowers  or  lenders. 


46 

Sec.  6.  That  the  Secretary  of  the  Treasury  be  author- 
ized in  the  case  of  any  deficits  in  revenue  in  any  one  fiscal 
year  to  issue  as  of  that  year  provisional  bonds  at  not  less 
than  par,  and  bearing  lowest  rate  of  interest  in  accordance. 
These  provisional  bonds  shall  be  issued  in  the  case  of 
deficits  of  revenue  in  the  following  manner :  For  the  first 
$5,000,000  in  any  fiscal  year  payable  in  two  years  ;  the 
second  $5,000,000  payable  in  three  years ;  the  third 
$5,000,000  payable  in  four  years;  the  fourth  $5,000,000  in 
five  years ;  the  fifth  $5,000,000  in  two  years ;  the  sixth 
$5,000,000  in  three  years;  the  seventh  $5,000,000  in  four 
years;  the  eight  $5,000,000  in  five  years;  the  ninth 
$5,000,000  in  two  years,  and  so  on.  These  provisional 
bonds  to  bear  interest  coupons  payable  semi-annually,  and 
shall  be  payable  in  gold  of  present  standard  or  silver 
at  the  then  existing  standard,  at  option  of  holder,  and 
shall  be  offered  for  competition  to  the  public,  and  awarded 
to  the  highest  bidders  in  amounts  of  $100  or  multiple 
thereof.* 

Sec.  7.  That  the  Treasurer  of  the  United  States  shall 
classify  as  to  costs  the  silver  purchased  under  the  Acts  of 
1878  and  1890,  according  to  the  prices  equivalent  to  the 
different  even  unit  ratios,  and  to  hold  such  respective  silver 
at  the  even  unit  ratio  price  next  above  cost,  or  at  cost  when 
purchased  at  an  even  unit  ratio  price,  and  to  set  aside  in 
bullion  the  differences  between  cost  and  said  even  unit  ratio 
price  for  a  silver  safety  fund  as  provided  for  in  Section  27 

of  this  bill.f 

Sec.  8.  That  all  silver,  whether  purchased  under  the  Acts 
of  1878,  1890,  or  under  this  act,  shall  be  held  at  the  even 
unit  ratio  price  next  above  cost,  and  shall  be  so  coined,  if 


*  The  policy  should  prevail  not  to  issue  long-time  bonds  for  current 
expenses  of  the  Government ;  any  deficit  should  be  provided  for  in  from 
two  to  five  years. 

t  Silver  should  be  held  at  cost,  the  Government  being  always  ready  to 
deliver  same  at  the  even  unit  ratio  next  above  cost,  the  difference  between 
the  even  unit  ratio  and  cost  forming  a  Silver  Safety  Fund  to  provide  for 
strengthening  the  gold  reserve  when  threatened  and  below  7$  per  cent,  of 
total  circulation ;  in  estimating  the  total  circulation,  gold  not  in  Govern- 
ment hands  not  to  be  taken  into  account.  The  Silver  Safety  Fund  is  more 
to  give  confidence,  for  under  the  operation  of  this  system  the  gold  reserve 
cannot  fall  to  any  such  figure  ;  gold  is  more  likely  to  accumulate  rapidly 
with  the  Government  to  the  extent  of  upwards  of  $400,000,000. 


47 

required,  when  the  market  value  of  silver  is  above  the  next 
lower  even  ratio  price.* 

Sec.  9.  That  the  circumferences  of  all  silver  coins  remain 
unchanged  ;  the  thickness  to  represent  variations  in  weight, 
and  that  all  silver  coins  coined  hereafter  in  accordance  with 
this  system  are  to  bear  in  addition  to  the  date  or  year  the 
figure  representing  the  ratio.f 

Sec.  10.  That  the  Secretary  of  the  Treasury  be  author- 
ized to  purchase  daily  (Sunday  and  holidays  excepted)  for 
delivery  within  fifteen  days,  from  the  lowest  bidders, 
180,000  ounces  of  silver,  or  so  much  thereof  as  may  be  offered 
at  the  market  price  thereof,  and  issue  legal  tender  treasury 
notes  therefor  as  provided  in  Section  2,  commencing  with 
the  first  day  of  each  fiscal  six  months  and  continuing  said 
purchases  during  the  first  one  hundred  and  fifty  days. 
This  would  provide  for  three  hundred  purchases  during 
the  fiscal  year;  provided,  however,  that  the  first  purchase 
under  this  bill  shall  be  made  on  the  first  secular  day  of  the 
ensuing  month.:}: 

Sec.  11.  That  these  purchases  of  180,000  ounces  daily 
shall  be  authorized  to  be  continued,  without  limitation  as 
to  market  price,  until  such  period  after  twelve  months, 
when  on  the  first  day  of  any  month  it  shall  be  found  that 
the  average  price  of  silver  purchased  during  the  previous 
month  shall  be  below  the  even  unit  ratio  price  next  above 
the  average  price  of  silver  for  the  entire  previous  twelve 
months.  Then  such  even  unit  ratio  price  shall  represent 
the  standard,  and  the  Secretary  of  the  Treasury  shall  be 
authorized  to  coin  silver  at  this  ratio  to  the  extent  of  silver 
on  hand  costing  below  this  ratio  valuation,  if  required,  and 

*  The  present  silver  at  16  to  1  will  not  require  recoining  until  silver 
advances  above  the  cost  of  the  respective  silver  held  ;  but  as  the  Govern- 
ment holds  much  silver  bullion,  no  recoinage  will  be  necessary  until  silver 
shall  again  be  worth  over  90  cents  per  ounce,  and  may  not  even  then  be 
necessary  to  any  extent,  for  silver  may  gradually  advance  under  this  system 
to  16  to  1  again,  but  whether  it  does  this  or  not  is  entirely  immaterial  as 
far  as  the  operation  of  this  system  is  concerned. 

t  The  weight  of  the  silver  dollar  is  only  of  importance  as  relating  to 
a  dollar  of  full  value  ;  for  convenience,  the  paper  representation  of  both  gold 
and  silver  will  circulate. 

X  The  purchase  of  silver  in  daily  uniform  quantities  guarantees 
against  manipulations  of  the  market  against  the  Government.  This  system 
is  so  safely  guarded  that  not  only  can  the  price  of  silver  not  be  manipulated 
against  the  Government  interest,  but  the  gold  reserve  and  amount  of  cir- 
culation cannot  be  controlled  by  any  combination  however  powerful. 


48 

to  credit  to  the  special  fund  in  bullion  the  differences  in 
value  between  any  silver  held  at  a  lower  ratio  price.* 

Sec.  12.  That,  a  standard  ratio  having  been  determined 
as  provided  for  in  Section  u,  future  purchases  of  silver  in 
quantities  as  provided  for  hereinafter  shall  be  limited  on  an 
advancing-  market,  not  to  exceed  the  ratio  standard  price 
until  the  average  market  price  for  silver  for  a  period  of 
twelve  months,  and  the  average  market  price  for  the  last 
month  of  this  period,  shall  exceed  the  standard  valuation, 
when  the  standard  of  the  silver  dollar  shall  be  changed  to 
the  next  higher  even  ratio  for  silver  than  said  average 
market  price  for  twelve  months. 

On  a  declining  market,  should  the  average  for  twelve 
months  and  the  average  for  the  last  month  of  the  twelve 
months  be  below  the  next  lower  even  ratio  standard  price, 
the  even  ratio  next  above  the  average  for  twelve  months 
will  be  the  standard,  provided  this  ratio  is  above  the  aver- 
age for  the  last  month,  otherwise  the  even  ratio  next  above 
the  average  for  the  last  month  shall  be  the  standard,  and 
the  purchasing  limit  reduced  to  the  new  standard.f 

*  The  world's  market  price  of  silver  will  undoubtedly  materially  ad- 
vance through  the  operations  of  this  system  ;  but  let  us  suppose  that  such 
will  not  be  the  case.  The  price  of  silver  during  1897  has  been  from  51  f  to 
65^  cents  per  ounce.  Purchases  made  below  60.84  would  be  coined  or  held 
at  34  to  1,  and  so  obtainable  from  the  Government,  either  in  coin  or  bullion, 
and  when  silver,  due  to  its  fluctuations,  is  selling  above  60.84,  it  would  be 
withdrawn  from  the  Government  for  export  or  use  in  the  arts  and  an  outlet 
be  created.  Through  the  operations  here  explained  silver  may  at  times  be 
exported  to  greater  advantage  than  gold  when  we  have  balances  to  settle 
abroad,  but  it  will  have  the  further  tendency  of  drawing  gold  from  other 
countries.  It  is  not  only  for  the  safety  of  our  monetary  system  that  we 
should  make  silver  a  money  of  final  redemption,  but  it  will  give  prosperity 
to  our  mining  interests  in  the  advanced  price  Europe  will  pay  us  for  our 
silver.  Through  the  non-adoption  of  this  system  prior  to  1893  this  country 
has  lost  at  least  $100,000,000  in  the  price  of  silver  since  actually  exported. 

t  Under  this  system  silver  cannot  become  demonetized  when  the  standard 
silver  dollar  is  valued  above  the  gold  dollar,  for  only  a  limited  quantity  could 
be  withdrawn  from  the  monetary  system  before  the  standard  would  be 
changed  to  the  next  higher  ratio  price  for  silver  ;  nor  could,  in  case  of  a  de- 
cline of  silver,  gold  become  demonetized  in  practice,  however  great  the 
quantity  of  silver  in  our  monetary  system  may  be,  notwithstanding  the  de- 
clared gold  standard,  for  the  system  provides  in  such  case  that  the  silver  dollar 
be  increased  in  weight  to  correspond  with  the  market  value  of  silver  bullion. 

A  movable  ratio  is  the  principal  feature  of  this  system.  This  movable 
standard  need  not  be  represented  by  the  even  unit  ratios,  but  may  be  based 
upon  the  multiple  of  any  weight,  as  of  24  grains,  viz.,  480  grains,  504 
grains,  etc.,  or  may  be  based  upon  a  value  standard  of  5  per  cent,  varia- 
tions, etc.,  but  the  even  unit  ratio  is  the  most  practicable.  Other  nations 
may  adopt  a  change  of  standard  at  every  one  and  a  half  ratios  or  two  unit 
ratios  apart,  as  their  own  needs  may  dictate  ;  as,  for  instance,  should  gold 
reserve  exceed  40  per  cent.,  a  difference  of  two  unit  ratios  would  increase 
the  silver  reserve.  The  mechanical  execution  of  this  system  would  vary 
according  to  the  needs  of  the  respective  countries. 


49 

Sec.  13.  That  after  the  first  standard  may  have  been  de- 
termined under  this  system,  the  future  limit  of  the  daily 
purchases  shall  represent  3  ounces  per  day  for  each  one 
thousand  inhabitants,  provided  that  the  purchases  shall  not 
exceed  the  production  of  silver  within  the  United  States 
during-  the  last  statistical  year,  nor  shall  they  exceed,  after 
the  first  year,  the  purchases  of  the  previous  year  at  any 
time  by  more  than  50  per  cent.,  provided  that  the  quantity 
limit  of  purchase,  otherwise  than  the  limit  by  standard  price, 
shall  always  be  not  less  than  1  ounce  per  day  for  each  one 
thousand  inhabitants ;  fractions  of  tens  of  thousands  per 
day,  however,  to  be  discarded.* 

Sec.  14.  That  the  National  Bank  act  shall  be  so  amended 
that  further  issues  of  National  Bank  note  circulation  under 
said  act  shall  cease,  and  that  this  circulation  shall  only  be 
withdrawn  except  at  not  exceeding  $4,500,000  per  month  at 
the  option  of  the  banks.  That  the  bonds  now  on  deposit  to 
secure  National  Bank  note  circulation  may  be  exchanged 
at  the  pleasure  of  the  banks  for  any  bonds  of  lesser  market 
value  ;  that  is,  bearing  a  lower  rate  of  interest,  or  bearing 
the  same  rate  of  interest  and  a  shorter  time  to  run,  and  no 
other  exchange  shall  be  legal.  That  all  bonds  deposited 
under  said  act,  against  which  no  circulation  has  been  issued, 
may  be  withdrawn. f 

Sec.  15.  That  the  National  Banks  may  specially  deposit 
United  States  bonds,  including  the  Provisional  Bonds 
authorized  in  Section  6  of  this  bill,  with  the  Secretary  of  the 
Treasury,  and  receive  therefor  notes  to  the  par  value  of 
the  bonds.  The  interest  on  the  bonds  so  deposited  to  cease 
until  said  notes  have  been  redeemed,   provided    the  total 

*  The  late  purchases  of  4,500,000  ounces  per  month  were  equivalent 
to  3  ounces  per  day  for  each  1,000  inhabitants,  estimating  the  population 
at  60,000,000.  The  present  population  of  the  United  States  is  conserva- 
tively estimated  to  be  above  67,000,000.  Allowing  on  the  above  basis  a  pur- 
chase of  200,000  ounces  per  day,  and  with  a  population  of  70,000,000,  this 
system  would  allow  of  63,000,000  ounces  of  silver  being  admitted  annually 
into  our  monetary  system,  which,  on  the  gold  standard,  would  be  equivalent 
to  being  admitted  into  the  monetary  system  of  the  world. 

t  The  creation  of  the  National  Bank  circulation  was  a  war  measure. 
In  recent  years  this  circulation  has  cost  the  nation  untold  thousands  of 
millions  through  the  manipulation  of  our  monetary  system.  The  only  excuse 
for  continuing  this  circulation  is  that  it  exists,  but  there  is  no  excuse  what- 
ever for  allowing  it  to  increase  one  single  dollar.  It  is  a  great  evil.  Any 
future  increase  in  circulation,  whether  of  Government  or  banks,  must  be 
dependent  upon  the  metal  reserve  in  the  hands  of  the  issue  department  of 
the  Government. 


5o 

note  issue,  both  of  Government  and  National  Banks  under 
this  act,  exclusive  of  the  notes  heretofore  issued  under  the 
general  banking  act,  shall  not  exceed  40  per  cent,  of  the  out- 
standing circulation.  The  bonds  so  deposited  shall  be  re- 
tained in  the  issue  department  of  the  Treasury  for  the 
redemption  of  said  notes.  This  note  not  to  be  a  legal 
tender,  but  to  be  receivable  by  the  Government  for  taxes. 
A  deposit  to  be  made  with  the  Secretary  of  the  Treasury 
to  cover  the  expenses  of  the  note  issue  ;  said  deposit,  how- 
ever, to  be  refunded  to  the  banks  when  said  expenses  are 
fully  covered  by  the  surrendered  interest  of  the  bonds  de- 
posited. The  Government  tax  against  the  present  issue  to 
remain  unchanged,  and  to  be  covered  into  the  Treasury, 
and  a  tax  to  be  imposed  upon  all  banks  in  proportion  to 
their  capital  and  surplus  to  cover  the  expenses  of  the  de- 
partment of  the  Comptroller  of  the  Currency,  and  no  more. 
Said  notes  to  be  payable  in  legal  tender  money,  and  the 
holder  to  have  the  option  of  either  money  the  bank  may 
hold.  That  said  National  Banks  only  shall  be  the  deposito- 
ries for  public  funds.* 

Sec.  16.  That  when  the  note  circulation  secured  by  the 
Government  bonds,  exclusive  of  the  present  National  Bank 
notes,  shall  not  exceed  40  per  cent,  of  the  total  circulation, 
the  public  may  surrender  to  the  Government  any  of  its 
outstanding  bonds  or  Provisional  Bonds  authorized  under 
Section  6  of  this  bill,  and  receive  therefor  currency  at 
their  face  value,  and  accrued  interest,  except  in  the  case  of 
bonds  sold  by  the  Government  during  the  period  of  1893 
to  1896,  which  shall  be  exchanged  when  surrendered  at  the 
price  received  by  the  Government,  less  such  portion  of 
interest  pertaining  to  the  premium  received  by  the  Govern- 
ment as  may  have  since  been  paid.     That  any  bonds  so  sur- 

*It  will  be  in  the  interest  of  sound  money  if  the  existing  National 
Bank  note  circulation  were  gradually  and  voluntarily  withdrawn  by  the 
banks,  say,  not  exceeding  $4,500,000  per  month,  unless  exchanged  for  issue 
under  Section  15  of  this  bill.  For  this  purpose  no  change  whatever  should 
be  made  in  the  law  relating  to  existing  bank  notes,  except  that  further 
issues  shall  be  prohibited  and  that  all  public  money  shall  be  deposited  pre- 
ferably in  banks  having  taken  out  circulation  under  Section  1 5  of  this  bill, 
to  the  extent  of  25  per  cent,  of  their  capital  and  surplus,  or  to  the  extent  of 
the  percentage  the  present  National  Bank  note  issue  bears  to  the  entire 
capital  and  surplus  of  the  National  Banks. 

By  Section  15,  the  National  Banks  are  favored  above  the  public  in  so 
far  that  they  may  recover  the  higher  rate  bonds  when  money  becomes 
abundant  and  interest  low,  while  the  public  can  only  receive  a  bond  bearing 
not  over  2.555  per  cent,  interest. 


5i 

rendered  otherwise  than  the  2.555%  or  Provisional  bonds 
shall  be  cancelled,  and  a  new  bond  issued  therefor,  as 
authorized  in  Section  14  of  this  bill,  to  the  extent  of  cur- 
rency issued  and  to  be  held  as  security,  provided  that  the 
accrued  interest  is  to  be  received  from  the  fiscal  depart- 
ment of  the  Government.* 

Sec.  17.  That  all  outstanding  bonds  of  the  United  States, 
otherwise  than  the  Provisional  Bonds  authorized  in  Section 
6,  may  be  exchanged  by  the  fiscal  department  of  the 
Government  for  a  bond  bearing  2.555  percent,  interest, 
payable  at  not  exceeding  39  years  at  the  discretion  of  the 
United  States  Treasurer.  All  bonds  issued  prior  to  1893  to 
be  exchanged  at  par  and  accrued  interest;  subsequent  bond 
issues  to  be  exchanged  at  the  price  obtained  for  same  and 
accrued  interest,  less  such  portion  of  interest  pertaining  to 
the  premium  received  as  may  have  since  been  paid.  In 
case  the  exact  amount  received  for  each  individual  bond 
should  be  unknown,  the  price  for  which  they  may  be  ex- 
changed shall  be  the  lowest  price  received  for  any  of  the 
same  issue. f 

Sec.  18.  That  at  any  time  after  twelve  months  from  the 
period  when  the  first  standard  for  silver  shall  have  been 
obtained  under  this  system,  should  the  outstanding  note 
issue,  authorized  by  this  act,  secured  by  the  United  States 
bonds,  not  exceed  30  per  cent,  of  the  entire  circulation,  the 
rate  of  interest  on  the  underlying  bonds  then  in  the  hands 
of  the  issue  department  of  the  Government,  otherwise  than 

*  This  provision  will  give  us  a  truly  elastic  money,  a  money  following 
the  national  pulse  and  not  affected  by  bank  influence.  Estimating  the 
silver  dollar  coined  or  silver  certificates  issued  under  both  the  Laws  of  1878 
and  1890,  inclusive  of  seigniorage,  covered  into  the  Treasury  at  $600,000,000, 
and  the  gold,  now  in  the  hands  of  the  Government,  8200,000,000,  we 
have  $800,000,000  of  coin  practically  in  the  issue  department  of  the  Govern- 
ment. This  would  admit  of  a  note  issue  of  $530,000,000  in  order  to  have  a 
metal  reserve  of  fully  60  per  cent.,  and  would  produce  a  total  possible  cur- 
rency of  $1,330,000,  or  a  note  issue  above  the  metal  reserve  of  $530,000,000 
as  against  the  present  note  issue  of  $246,000,000,  and  would  admit  of  an 
increase  of  $284,000,000.  It  is  conservatively  estimated  that  there  is  at 
present  in  the  country  $550,000,000  of  gold.  This  would  admit  of  immediate 
heavy  deposits  with  the  Government,  and  correspondingly  increase  the  limit 
of  note  circulation.  Suppose  the  circulation  should  represent  40  per  cent, 
secured  by  bonds  and  an  expansion  desired.  By  depositing  $30,000,000  of 
gold  and  $20,000,000  of  bonds  ;  $50,000,000  of  legal  tender  money  could  be 
obtained.  This  bill  is  framed  to  have  gold  concentrate  in  the  issue  depart- 
ment of  the  Government. 

tin  refunding  any  bonded  indebtedness  the  Government  should  be 
the  gainer,  for  this  Government  is  better  able  to  fulfill  its  obligations  than 
any  Government  on  earth,  and  does  not  need  the  aid  of  the  "  reorganizer." 


those  specially  deposited  by  the  National  Banks,  shall  be 
reduced  to  2.19  per  cent.,  and  when  such  note  issue  shall 
equal  but  20  per  cent.,  the  rate  of  interest  to  be  reduced  to 
1.825  per  cent.* 

Sec.  19.  That  provided  during1  leap  years  one  day  pro- 
portionate interest  to  be  added  for  February  29th,  to  the 
rate  of  interest  of  any  bonds  issued  under  this  act.f 

Sec.  20.  That  any  National  Bank  be  authorized  to  de- 
posit United  States  coined  silver  with  a  trust  company  in 
its  own  State,  or  with  a  clearing  house  in  its  own  State ; 
such  trust  company  and  such  clearing  house  to  be  approved 
by  the  Treasurer  of  the  United  States.  That  said  bank  be 
authorized  to  issue  circulation  against  said  deposits  to  the 
full  par  value;  said  notes  shall  bear  upon  their  face  the 
statement  that  they  are  issued  against  deposits  of  United 
States  silver  coin,  and  that  they  are  payable  in  legal  tender 
money  by  the  bank  of  issue,  and  by  the  depositary  of  the 
coin,  and  at  such  other  centers  within  the  United  States 
that  may  be  preferred,  in  order  that  there  may  be  a  place 
of  redemption  within  750  miles  of  any  one  point.  The 
depositary,  whether  clearing  house  or  trust  company,  to 
guarantee  the  payment.  The  notes  may  be  issued  in  de- 
nominations of  $1  or  multiple  thereof ,  and  shall  not  be  legal 
tender  or  receivable  by  the  Government,  National  Banks 
may  issue  such  notes  to  the  extent  of  80  per  cent,  of  their 
capital  and  surplus;  50  per  cent,  of  the  legal  reserve  may  be 
represented  by  these  notes  or  by  deposits  in  reserve  cities.:}: 

*  Provides  to  give  the  Government  the  advantage  of  any  lower  interest 
rates. 

fFor  the  conveniences  of  exchange  and  re-exchange  against  circula- 
tion, at  2.555  Per  cent.,  a  $1,000  bond  would  bear  $.07  interest  per  day  ;  a 
$100  bond,  $.07  in  ten  days. 

I  This  section  does  "something  for  the  banks,"  and  a  circulation 
under  Section  1 5  should  be  a  condition.  A  bank  may  under  this  section 
secure  silver,  say,  at  30  to  1,  or  68.96  cents  per  ounce,  without  tying  up  any 
money,  and  may  hold  same  until  silver  may  advance  to  say  perhaps  23  to  1, 
or  89.94  cents  per  ounce,  and  gain  about  20  cents  per  ounce,  without  having 
one  dollar  invested  ;  yet  such  gain  will  not  be  at  the  expense  of  the  people 
nor  undermine  the  monetary  system.  It  would,  however,  create  a  demand 
for  the  newly  coined  silver,  and  cause  the  same  to  be  stored  otherwise 
than  in  the  Government  vaults.  It  will  make  every  bank  interested  in  the 
advance  of  silver.  This  bill  should  receive  the  active  support  of  every 
honest  banker.     It  provides  : 

First. — For  a  uniform  money. 

Second.— An  underlying  bond  to  guard  against  low  interest  rates. 

Third. — Allows  banks  to  recover  high  interest  bonds  deposited  against 
circulation. 

Fourth. — Gives  banks  the  advantages  of  any  advance  in  silver. 


53 

Sec.  21.  That  the  Secretary  of  the  Treasury  be  author- 
ized to  issue  a  legal  tender  note  of  the  nature  provided  for 
in  Section  2  of  the  denomination  of  25  cents  ;  said  issue  not 
to  exceed  at  any  time  \  per  cent,  of  the  total  circulation. 
The  dimensions  to  represent  a  surface  of  from  70  to  80  per 
cent,  of  the  present  United  States  legal  tender  note.* 

Sec.  22.  That  the  interest  of  any  bonds  deposited  for 
currency  exceeding  the  amount  set  aside  by  this  act  as  pro 
vided  for  in  Section  4,  shall  be  credited  to  the  Silver  Safety 
Fund.f 

Sec.  23.  That  the  subsidiary  coins  of  denominations  not 
less  than  y1^  of  a  dollar  are  to  be  coined  at  one  even  unit 
ratio  higher  for  silver  than  the  existing  standard.  That  all 
coins  of  less  denomination  than  -^  of  the  dollar  are  to  be 
coined  of  part  silver  in  such  proportion  that  their  value 
may  be  the  value  of  two  ratios  higher  for  silver  than  the 
existing  standard.  Sufficient  alloy  to  be  employed  to  retain 
their  present  dimensions.^: 

Sec.  24.  That  all  silver  coined  under  this  system  when 
exported  shall  be  in  final  settlement,  and  when  re-imported 
shall  be  turned  over  to  the  Government  to  be  converted 
into  bullion. § 

Sec.  25.  That  all  silver  coined  under  this  system  shall 
be  .925  fine. 

Sec.  26.  That  all  creditors  of  corporations,  whether 
National  Banks  or  State  Banks,  and  trust  companies,  trans- 
acting an  interstate  business  and  receiving  deposits  subject 
to  drafts  at  sight,  shall  have  the  option  of  demanding  pay- 
ment in   either   money  these    corporations    may    have   on 

*  This  note  is  very  much  needed  for  mailing  purposes,  and  will  in  a 
measure  relieve  the  postal  money  order  department ;  a  department  which 
has  no  right  to  exist  under  our  Government,  and  the  same  applies  to  a  postal 
savings  bank  system.  Transfers  of  money  otherwise  than  through  the 
registered  mail  should  be  left  to  the  banker,  but  for  a  double  fee  the  regis- 
tering department  might  guarantee  contents  to  the  extent  of  $10. 

t  It  may  be  expected  that  this  bill  will  save  the  Government  in  the 
course  of  a  couple  of  years  fully  $10,000,000  per  annum  in  interest  on 
bonds. 

I  The  light  weight  subsidiary  coins  are  a  temptation  for  fraudulent 
coinage  ;  an  approximating  value  would  prevent  this. 

§  This  is  practically  the  case  with  gold  when  below  "  tolerance  ";  it 
is  simply  bullion.  All  United  States  silver  coins  should  only  be  admitted 
from  abroad  as  bullion. 

||  This  is  the  fineness  of  commercial  sterling  and  would  facilitate  the 
use  of  the  coinage  in  the  arts,  where  gold  coin  is  so  extensively  used. 


54 

hand  or  on  deposit  for  their  account,  provided  this  shall 
not  include  any  coined  silver.* 

Sec.  27.  That  a  Silver  Safety  Fund  be  created,  to  which 
fund  shall  be  credited  the  seigniorage  as  provided  for  in 
Sections  7  and  11,  and  interest  as  provided  in  Section  22. 
The  object  of  this  fund  is  to  lower  the  cost  of  silver  or  to 
increase  in  weight  the  standard  silver  dollar  in  case  the 
gold  reserve  should  be  below  7*^  per  cent,  and  that  the 
Secretary  of  the  Treasury  shall  be  directed  to  pay  out  the 
interest  money  received  by  this  fund  against  the  regular 
purchases  of  silver,  and  to  place  the  silver  so  paid  for  with 
the  silver  constituting  this  fund.f 

Sec.  28.  That  at  any  time  after  12  months  from  the  re- 
sumption of  silver  purchases  under  this  system  should  the 
gold  reserve  be  less  than  17^  per  cent,  of  total  circulation, 
the  silver  standard  to  be  changed  in  manner  as  provided  in 
Section  12,  on  six  months'  average,  and  should  the  gold 
reserve  fall  below  12^  per  cent,  to  be  so  changed  on  a  three 
months'  average.  Should  the  gold  reserve  decline  below 
7%  per  cent,  the  Silver  Safety  fund  to  be  drawn  upon  to 
lower  the  silver  standard  to  bring  silver  to  full  gold  value. :{: 

Sec.  29.  That  all  subsidiary  money  coined  under  this 
system  shall  be  legal  tender  to  the  extent  of  50  pieces  of 
each  denomination^ 

Sec.  30.  That  the  Secretary  of  the  Treasury  shall  deposit 
in  National  Banks  any  money  on  hand  received  as  revenue 
exceeding  2l/2  per  cent,  of  the  entire  circulation.! 

Sec.  31.  That  the  National  Bank  act  shall  be  so  amended 
that  any  bank  after  five  years  of  its  existence  may  establish 

*  This  section  to  guard  against  the  hoarding  of  gold  by  such  corpo- 
rations for  the  purpose  of  manipulating  our  money  system.  Under  this 
section  the  Government  can  demand  from  banks  any  gold  they  may  have  on 
hand  in  exchange  for  their  notes  received  by  the  Government  in  taxes. 

f  This  Silver  Safety  Fund  will  provide  the  means  for  increasing  the 
weight  of  the  silver  dollar  to  full  gold  value.  When  upon  a  decline  in 
silver  the  gold  reserve  should  fall  below  7$  per  cent.,  an  almost  impossible 
situation  under  this  system.  When  gold  reserve  should  be  "]\  per  cent.,  the 
silver  reserve  would  be  52  £  per  cent.,  the  60  per  cent,  reserve  being  always 
maintained. 

%  This  section  represents  a  cautionary  measure  to  protect  the  gold 
reserve  on  the  first  evidence  of  gold  being  withdrawn,  and  will  bring  stand- 
ard silver  closer  to  the  gold  value. 

§  Subsidiary  coins  now  being  of  approximate  full  value,  the  legal  tender 
buality  may  be  conservatively  advanced  to  50  pieces  each. 

||  To  avoid  unnatural  contraction  of  money  the  Treasury  should  at  no 
time  hold  within  its  own  vaults  over  z\  per  cent,  of  circulation. 


55 

a  branch  bank  or  office  for  each  $500,000  of  its  capital  and 
surplus  in  any  city  or  town  within  the  United  States.* 

Sec.  32.  That  in  estimating  the  circulation  for  the  issue 
of  notes  to  the  extent  of  40  per  cent,  secured  by  United 
States  bonds,  all  coined  silver  which  may  not  have  advanced 
in  value  beyond  the  value  of  the  gold  dollar  shall  be  esti- 
mated whether  in  the  hands  of  the  Government,  in  circula- 
tion or  deposited  by  banks  against  circulation  as  provided 
for  in  Section  20.f 


A  serious  crisis  is  overhanging  our  institutions  and  so- 
cial order.  To  preserve  the  nature  of  our  Government,  ac- 
tion can  no  longer  be  deferred.  Since  many  years  an 
insidious  wrong  has  grown  up  in  our  midst  through  the 
management  and  organization  of  incorporations  under  the 
laws  of  the  separate  States  constituting  the  Union.  It  may 
be  said  that  the  evil  has  been  brought  here  from  the  monarchi- 
cal countries  of  Europe,  but  has,  through  lack  of  vigilance 
on  the  part  of  our  citizens,  found  a  ready  soil,  and  become 
more  oppressive  than  in  its  native  place. 

Corporations  are  of  two  kinds :  First,  those  that  are  in- 
tended to  aid  the  individual  in  his  calling,  such  as  railroads, 
banks,  insurance  companies,  etc.;  second,  those  that  enter 
into  competition  with  the  individual,  such  as  industrial  cor- 
porations, etc.  The  former  should  be  restricted  by  law  that 
they  may  not  become  oppressive  ;  the  latter  have  no  reason 
to  exist  in  this  country,  and  are  against  the  fundamental 
principles  of  our  Government  established  to  promote  the 
general  welfare. 

Under  the  nursed  prejudices  engendered  by  the  Civil 
War,  corporations  or  combinations  of  capital  largely  repre- 

*  It  is  a  great  mistake  to  expect  to  give  relief  to  sections  by  allowing 
branch  banks  to  be  established  in  villages,  or  allowing  village  banks  to  take 
out  circulation.  Money  is  not  so  created  or  distributed.  Create  a  money 
that  will  inspire  confidence  under  all  circumstances.  Allow  branch  banks 
to  be  established  in  larger  centers  and  there  will  be  no  scarcity  of  money  in 
any  section  within  the  United  States. 

f  All  silver  not  of  full  value  must  be  considered  as  in  the  hands  of 
the  Government,  for  it  will  finally  be  presented  for  payment ;  but  when  the 
silver  has  advanced  to  a  market  value  beyond  that  of  the  gold  dollar,  it 
should  be  ignored  in  the  same  manner  as  the  gold  coin  not  in  the  hands  of 
the  Government. 


56 

senting  foreign  owners  have,  step  by  step,  increased  their 
power,  until  to-day  a  condition  exists  far  more  serious  to 
the  welfare  of  the  people  than  that  which  caused  the  War  of 
Independence  or  the  Civil  War. 

The  monetary  system  which  affects  and  controls  the 
welfare  of  every  individual  more  than  any  legislation  has 
for  many  years  been  manipulated  by  speculative  capital 
through  the  National  Bank  circulation,  and  panic  after 
panic  has  been  produced  at  will,  causing  privations  and  hard- 
ships throughout  the  land.  Encouraged  by  success,  an  at- 
tempt is  now  being  made  to  secure  the  whole  circulation 
that  the  entire  population  may  be  made  to  pay  tribute  to  a 
few  whenever  conditions  or  their  ability  to  pay  may  war- 
rant. Railroads  have  been  wrecked  for  the  purpose  of  re- 
organization and  robbery,  making  their  stocks  upon  which 
many  of  our  citizens  were  dependent  for  their  income 
valueless,  and  forcing  their  owners  to  seek  a  living  in  fac- 
tories and  elsewhere.  This  reckless  dishonesty  has  forced 
many  young  girls  and  women  from  the  congenial  surround- 
ings of  their  former  homes  to  seek  for  the  necessaries  of 
life. 

A  class  of  marauders  under  the  cloak  of  bankers  have 
infested  this  country  for  years,  having  obtained  control  of 
railroads  to  ruin  them,  and  to  issue  watered  and  worthless 
securities,  by  means  of  which  to  draw  the  hard-earned 
savings  from  the  producing  classes. 

Railroads  whose  circumstances  and  conditions  would 
forbid  their  being  reorganized  are  made  the  means  of  pay- 
ing them  tribute  through  refunding  schemes,  by  which  mil- 
lions are  taken  from  the  people,  and  the  people  placed 
under  bondage  to  them  for  generations.  Not  content  that 
all  people  could  be  reached  to  pay  them  tribute  through 
the  railroads,  the  control  of  the  street  railroads  of  almost 
every  town  and  village  of  the  country  has  been  secured, 
and  excessive  and  worthless  stock  issued  to  catch  under 
misrepresentation  the  earnings  of  the  local  producer. 

Space  is  too  limited  to  enter  further  into  details,  but  the 
remedy  is  simple.  Railroads  should  be  managed  by  the 
general  or  common  stockholders,  and  it  should  be  made  a 
felony  for  any  officer  to  derive  an  income  from  any  bonds 
or  stocks  of  the  railroad  greater  than  the  income  of  the 
common   or  general  stock.      As  long  as  a  road  is  not  so 


57 

governed,  the  right  of  States  to  regulate  maximum  rates 
should  not  be  contested.  Railroads  should  be  taxed  for 
non-dividend  paying  stocks ;  the  taxes  to  be  borne  by  the 
holders  of  securities  receiving  interest  or  dividends,  and  all 
bonds  should  mature  when  combined  interest  paid  equals 
principal,  on  the  ground  of  public  policy.  These  combina- 
tions have  amassed  such  enormous  capital,  principally  dur- 
ing the  recent  mugwump  administration,  that  they  even  at- 
tempt to  refund  bonds  of  railroads  having  yet  fifteen  to 
twenty  years  to  run. 

Industrial  corporations  have  been  organized  more  as  a 
pretense  for  flooding  the  nation  with  worthless  stocks.  As  a 
remedy  against  this  evil  the  entire  capitalization  of  all  in- 
dustrial companies  should  be  annually  taxed  to  the  extent 
of  the  ruling  rate  of  interest  the  Government  pays  on  its 
bonds,  and  severe  restrictions  imposed  as  to  their  manage- 
ment and  absolute  interdiction  of  further  similar  organiza- 
tions. 

Laboring  men,  do  not  fight  your  co-workers  who  may 
not  be  members  of  your  union  ;  respect  their  rights,  but 
fight  your  enemy.  You  have  the  power  in  the  ballot-box 
to  drive  the  marauder  who  has  overrun  our  fair  country 
from  your  midst.  At  the  ballot-box  of  1900  you  have  the 
power  to  prevent  the  organization  of  another  industrial 
company,  you  have  the  power  to  undo  as  to  the  future  the 
wrongs  committed  by  unprincipled  men  who  have  throt- 
tled this  country,  put  a  stop  to  the  management  of  corpo- 
rations by  their  creditors,  refuse  the  use  of  the  mails  for  the 
furtherance  of  the  sale  of  all  these  fraudulent  securities  as 
they  were  refused  to  the  lotteries. 

Securities  have  been  issued  to  represent  accumulated 
losses,  not  bonuses,  expenses  for  the  purchase  of  the  press  ; 
in  fact,  the  very  fees  paid  by  them  to  their  lawyers  to  keep 
them  out  of  jail  are  capitalized  and  forced  upon  the  public. 
The  public  pay  to  keep  the  very  men  who  defraud  them 
out  of  the  clutches  of  the  law. 

Much  good  work  can  be  done  at  the  ballot  box  in  1898, 
but  the  final  work  will  have  to  be  done  in  1900,  and  the  new 
century  inaugurated  with  honesty  in  business  transactions. 
It  is  enough  to  make  a  lover  of  his  country  tremble  with 
indignation  to  see  these  men,  emboldened'by  success,  openly 
declare  that  millions  of  securities  are  issued  as  bonuses  to 


58 

the  so-called  syndicates.  In  the  refunding  schemes  part  of 
the  fixed  charges  are  funded  by  bonds  that  the  market 
value  of  many  rotten  securities  may  be  maintained  or  ad- 
vanced to  permit  unloading  upon  the  public.  These  com- 
binations are  the  direct  cause  of  all  labor  troubles  and  all 
existing  distress. 

The  honest  business  man  demands  profits  according  to  the 
value  of  his  enterprise  or  the  services  rendered,  but  the  mod- 
ern reorganizer  and  promoter  follows  the  practice  of  the 
Jew  who  demands  his  profits  according  to  the  ignorance  or 
want  of  information  or  susceptibility  to  be  misled  on  the 
part  of  his  victim.  These  reorganizers  are  banded  together 
like  the  brigands  of  old  or  the  mafia  of  Italy,  and  a  greater 
curse  than  these.  Seventy  millions  of  people  have  become 
their  victims. 

A  great  victory  was  won  in  the  election  of  Greater  New 
York,  in  so  far  as  the  election  was  carried  against  a  press 
owned  by  corporations.  All  the  wrongs  that  may  have 
been  committed  by  local  politicians  cannot  equal  the 
wrongs  of  a  single  railroad  reorganization  scheme.  Would 
it  not  have  been  pertinent  to  have  asked  the  candidates 
who  were  opposed  to  the  successful  candidate,  whether 
they  have  had  any  interest  in  these  reorganization  combi- 
nations? 


Contributions  to  further  the  object  of  this  work,  and 
subscriptions  to  this  publication,  may  be  addressed  to  F. 
W.  Luttgen,  27  William  street,  New  York  City. 


PART     III. 

The  following  pages  represent  previous  publications  of 
the  author  and  some  letters  received  by  him  relating 
thereto;  also,  sundry  letters  of  the  author  addressed  to 
men  prominent  in  public  affairs. 

Pamphlets,  copyrighted  1891,  1892,  1893. 

IN  THE  "EVENING  POST,"  JANUARY  14,  1891. 

The  effect  of  free  silver  coinage  would  be  the  virtual 
throwing  upon  the  market  of  $300,000,000  of  silver  now 
held  by  the  United  States  Treasury. 

This  enormous  quantity  of  silver,  under  the  present  laws, 
has  been  effectually  locked  up  and  kept  out  of  the  market, 
being  held  by  the  Government,  with  its  currency  on  a  gold 
standard  at  $1.2929  per  ounce;  while  as  recently  as  No- 
vember 19,  1890,  the  ounce  of  silver  sold  at  96^  in  the  open 
market. 

Free  coinage  on  a  basis  of  $1.2929  per  ounce  will  neces- 
sarily put  gold  at  a  premium,  and  this,  with  silver  at  g6%, 
would  be  33^  per  cent. 

Gold  being  at  a  premium  of,  say,  33  per  cent,  Europe 
could  obtain  from  our  Government  its  silver  at  about  96 
cents  per  ounce,  through  the  presentation  of  silver  certifi- 
cates, legal  tenders  or  National  Bank  notes,  of  which  about 
$900,000,000  are  outstanding. 

Much  of  this  silver  has  been  bought  by  the  Government 
during  speculative  excitement  as  high  as  $1.20  per  ounce. 
With  this  practically  unlimited  supply  of  silver  suddenly 
put  within  the  reach  of  the  markets  of  the  world,  an  esti- 
mated decline  to  86  cents  per  ounce  would  not  be  unreason- 
able, and  this  would  be  equal  to  50  per  cent,  premium  on 
gold. 

A  delay  of  one  year  would  aggravate  the  evil,  as  the 
stock  of  silver  would    be  yet  greater.     The    purchase  of 


6o 

about  4,500,000  ounces  per  month  cannot  advance  the  price 
to  $1.29,  considering  present  production,  but  will  keep  the 
price  at  an  artificial  height. 

Pamphlet. — "  The  True  System  of  a  Supplementary 
Silver  Coinage,"  by  Fred'k  Wm.  Luttgen,  Febru- 
ary 10,  1 89 1. 

In  introducing  this  system  the  author  would  state  that, 
prompted  by  a  desire  to  be  able  to  contribute  to  avert  the 
overhanging  disaster  to  those  who  are  dependent  upon  their 
savings,  limited  incomes,  or  upon  their  wages,  he  has  de- 
voted much  time  and  thought  to  discover  a  system,  auto- 
matic in  its  operation,  upon  which  the  advocates  of  silver 
and  the  conservative  believer  in  a  gold  standard  could  unite, 
and  which  in  its  essential  parts  might  gradually  meet  with 
the  approval  of,  and  be  adopted  by,  the  nations  of  the 
world. 

The  free  coinage  of  silver,  whether  upon  the  ratios  of 
16  to  1,  or  upon  any  other  conventional  ratios,  will  effect  a 
change  of  the  standard  of  value  and  disturb  all  commercial 
nations. 

Many  believe  in  the  "  phantom  "  of  an  "  international 
conference,"  but  it  is  no  more  in  the  power  of  the  united 
action  of  the  principal  nations  to  establish  a  permanent 
ratio  of  silver  to  gold  than  it  is  in  their  power  to  regulate 
the  weather.  The  true  ratio  is  established  by  natural 
laws,  and  these  are  a  safeguard  against  frequent  fluctua- 
tions. 

Free  coinage  of  two  metals  is  an  impossibility;  either 
one  or  the  other  would  soon  fall  into  disuse. 

A  metal  acting  as  a  circulating  medium  or  standard  of 
values  must  be  in  its  movements  as  free  as  the  air,  not 
hampered  by  import  duties,  discriminations  or  restrictions 
of  any  kind  whatever,  by  any  nation  or  government. 

The  price  of  silver  depends  largely  upon  the  free  circu- 
lation of  gold.  The  hoarding  of  gold  must  necessarily 
lower  the  price  of  silver,  whether  under  free  coinage  or 
not,  and  our  present  system  is,  therefore,  not  to  the  advan- 
tage of  silver  ;  nor  does  the  Government's  accumulation 
of  silver,  which,  through  its  fictitious  valuation  is  inactive 
or  dead,  aid  the  price  of  silver  to  the  extent  it  would 
as  an  active  circulating  medium,  for  that  silver  is  lost  to 


6i 

commerce,  and  gold  will  have  to  supply  its  place  in  our  ex- 
ports whether  by  exports  or  non-imports.  It  has  been  my 
endeavor  to  devise  a  system  under  which,  as  under  free 
coinage,  the  silver  would  flow,  as  gold  supplementary  to 
gold,  in  and  out  of  the  United  States  Treasury,  in  and  out 
of  the  country,  obedient  to  the  laws  of  commerce.  It  has 
also  been  my  object  to  obviate  the  extreme  speculative  fluc- 
tuations. 

This  system  would  give  silver  every  advantage  and  en- 
hance its  value,  and,  by  relieving  gold,  lower  the  price  of 
gold,  and  be  a  guarantee  that  the  gold  standard  would  not 
again  be  assailed. 

I  now  submit  the  following  : 

That  the  standard  of  the  silver  dollar  be  changed,  and 
of  the  ratio  next  higher  for  silver  than  the  average  daily 
market  price  for  the  previous  twelve  months,  provided  this 
ratio  is  not  below  the  average  price  for  the  last  month  of 
the  twelve  months. 

That  1 80,000  ounces  of  silver  bullion  be  purchased  daily, 
Sundays  and  holidays  excepted,  or  so  much  thereof  as  may 
be  offered  at  the  price  not  exceeding  the  standard  then 
existing. 

That  should  silver  decline  in  price  to  an  average  for 
twelve  months  below  the  next  lower  ratio  for  silver,  the 
standard  to  be  changed  to  that  ratio.* 

That  in  the  case  of  the  gold  reserve  in  the  United  States 
Treasury  falling  below  7^  per  cent,  of  the  total  paper  circu- 
lation, the  standard  silver  dollar  to  be  increased  in  weight 
to  the  next  ratio  and  the  purchasing  limit  of  silver  cor. 
respondingly  reduced  ;  this  to  check  the  outflow  of  gold. 

That  all  silver  of  previous  standards  is  to  be  exchanged 
on  demand  for  existing  standard. 

That  no  silver  coins  whatever  are  to  be  purchased ; 
mutilated  United  States  coin  to  be  exchanged  at  relative 
value. 

That  all  silver  dollars  coined  hereafter  in  accordance 
with  this  system  are  to  bear,  in  addition  to  the  date  or  year, 
the  figure  representing  the  ratio. 

*Had  this  system  been  adopted  by  the  United  States  prior  to  1893,  the 
series  of  panics  which  have  occurred  since  then  would  not  have  taken  place, 
and  the  nation  would  have  avoided  losses  aggregating  probably  over 
1,000,000,000  of  dollars.  We  have  also,  as  here  predicted,  since  experi- 
enced the  hoarding  of  gold  and  consequent  decline  in  silver. 


62 

IN   THE  "COMMERCIAL   ADVERTISER,"  MAY  5, 

1892. 

As  the  principal  nations  of  the  world  are  on  the  gold 
standard,  silver  at  present  the  world  over  is  only  in  the 
position  of  a  subsidiary  coin,  for  no  balances  between 
nations  can  be  liquidated  with  silver,  except  at  its  bullion 
value  in  gold.  Bimetallism  in  its  true  sense  does  not  there- 
fore exist,  nor  has  it  ever  existed.  Nations  for  their  own 
domestic  exchanges  and  convenience  issue  "  promise  to  pay 
gold  "  on  silver,  the  same  as  on  paper. 

Many  who  recognize  the  danger  of  our  present  position 
are  deluded  by  the  proposed  International  Convention  into 
inactivity. 

That  the  gold  standard  will  sooner  or  later  prevail 
throughout  the  world  there  can  be  no  doubt,  and  it  is 
equally  certain,  that  on  account  of  the  scarcity  of  gold, 
silver  will  have  to  be  employed  to  effect  this  general  gold 
standard.  Let  us,  then,  treat  this  question  with  less  preju- 
dice and  arrive  at  a  solution  for  all  time.  Let  us  be  the 
leader  among  nations  and  place  our  financial  system  beyond 
all  danger.  To  accomplish  this,  silver  must  find  its  own 
ratio.  No  arbitrary  ratio,  whether  established  by  one 
nation  or  by  a  convention  of  nations,  can  aid  silver. 

The  friends  of  silver  must  discard  from  their  minds  all 
preference  for  the  ratio  of  16  to  1.  This  would  be  the  first 
step  toward  a  solution.  The  greater  employment  of  silver 
will  no  doubt  enhance  its  value,  but  this  must  be  left  to 
natural  laws. 

Pamphlet. — The  Luttgen  Monetary  System.     Bimetallism 
or  Supplementary  Silver  Coinage.     May  10,  1892. 

It  is  probably  due  to  prejudice  on  the  part  of  the  silver 
advocates,  as  well  as  of  the  gold  monometallists,  that  the 
problem  of  bimetallism  has  not  yet  been  solved.  The  vary- 
ing relation  of  silver  to  gold  has  not  only  disturbed  our 
finances  since  the  existence  of  our  Government,  but  has  dis- 
turbed the  finances  of  the  world  for  even  a  greater  period. 

Our  present  system  is  termed  by  the  New  York  Cham- 
ber of  Commerce  "  a  standing  menace."  By  the  press  it  is 
called  "  the  blight  of  our  commerce,"  etc.  Yet  no  solution 
is  offered. 


63 

Should  the  United  States  absolutely  cease  to  purchase 
silver,  silver  may  fall  to  such  an  extent  as  to  produce  finan- 
cial disturbances  here  and  abroad,  but  under  this  system, 
when  the  Government  shall  cease  to  buy,  it  would  be  be- 
cause silver  can  be  sold  elsewhere  at  an  advancing  price. 

Every  human  being,  however  humble,  consumes  some 
product  of  foreign  lands.  A  uniform  metal  standard  would, 
therefore,  lessen  the  cost  of  the  necessaries  of  life  for  all 
humanity.  Feeling  that  the  gratitude  of  the  human  race 
would,  therefore,  be  due  to  him  who  would  forever  solve 
this  problem,  I  have  devoted  much  time  and  study  to  the 
subject,  and  submit  to  the  public  the  result  of  my  labors, 
which  I  have  no  doubt  will,  when  carefully  studied,  meet 
with  the  approval  of  all,  and  bring  all  nations  one  by  one 
upon  one  standard. 

The  first  and  necessary  object  was  to  avoid  any  radical 
changes  from  our  present  system,  but  to  so  guide  it  as  to 
lead  us  to  a  safe  and  permanent  basis. 

Gold  is  the  standard  of  the  leading  nations  of  the  world, 
the  silver  employed  by  such  nations  acting  as  a  token- 
money  only,  sustained  by  government  credit.  In  France, 
for  instance,  silver  is  a  cause  of  constant  solicitation.  The 
employment  of  silver  is  necessary  to  bring  all  nations  upon 
the  gold  basis.  According  to  natural  laws,  the  relative 
value  between  gold  and  silver  will  always  be  subject  to 
changes,  whether  of  greater  or  lesser  degree.  A  change- 
able silver  standard  that  would  follow  these  fluctuations 
would  be  impracticable,  as  a  fixed  standard  would  be  danger- 
ous to  any  financial  system  based  upon  it.  A  middle  course 
based  upon  natural  laws  beyond  the  control  of  any  indi- 
vidual or  nation  was  by  these  circumstances  pointed  out  to 
me  as  necessary  for  a  system  all  nations  could  approve  of 
and  adopt  when  their  own  affairs  might  suggest,  and  fur- 
thermore which  a  single  nation  could  adopt  with  absolute 
safety  and  great  benefit  to  its  monetary  system. 

The  Luttgen  Monetary  System,  as  already  announced  in 
my  publication  of  February,  1891,  is  based  upon  a  restricted 
movable  ratio  or  standard  for  silver,  restricted  to  meet  only 
the  permanent  relative  changes  of  value  between  silver  and 
gold,  yet  having  a  bullion  value  in  the  silver  dollar  at  all 
times  within  about  5  per  cent,  of  the  average  value  for  the 
previous  twelve  months. 


64 

The  silver  dollar  is  to  be  at  all  times  of  an  even  unit 
ratio  with  gold.     All  fractional  ratios  to  be  ignored. 

As  the  whole  Luttgen  Monetary  System  is  based  upon 
natural  laws,  the  first  standard  would  be  established  by 
natural  laws.  Should  silver  advance,  as  it  is  believed  it 
would  after  the  adoption  of  this  permanent  policy,  this  first 
standard  may  not  be  established  for  considerably  upwards 
of  twelve  months,  and,  if  this  monetary  policy  is  adopted 
by  other  nations,  the  first  standard  may  approach  our  pres- 
ent standard  of  16  to  I.  Silver  will  find  its  own  level  under 
this  policy. 

The  stability  of  standard  is  secured  as  follows  : 

First,  by  the  average  market  price  of  twelve  months  ; 
next,  by  the  relation  of  this  average  price  to  the  even  ratio 
value  between  silver  and  gold.  Should,  for  instance,  with 
the  fluctuations  of,  perhaps,  20  cents,  say  from  93!  cents  per 
ounce  to  $1.13^  per  ounce,  the  average  price  be  $1.03^  for 
twelve  months  and  the  average  price  for  the  succeeding 
twelve  months  be  $i.o8£,  the  standard  of  19  to  1  would  be 
the  legal  standard  for  both  periods  under  this  system,  and 
whenever  the  fluctuations  should  bring  the  price  of  silver 
above  $1.0888,  silver  would  be  demanded  from  the  Govern- 
ment and  exported  in  place  of  gold.  The  purchases  having 
at  all  times  been  made  below  the  standard,  the  Government 
would  profit  by  paying  out  silver  at  standard. 

This  system  will  steady  the  purchasing  power  of  both 
gold  and  silver ;  and  the  two  metals,  being  practically 
blended,  an  increase  in  the  supply  of  either  metal  will  have 
little  effect  upon  the  purchasing  power  of  both  metals,  thus 
interwoven  into  one  measure  of  value. 

To  illustrate  the  system  I  will  suggest  the  few  changes 
that  would  be  necessary  in  our  present  laws.  The  Act  of 
July  14,  1890,  provides  that  the  Government  maintain  the 
two  metals  on  a  parity  with  each  other  upon  "  such  ratios 
as  may  be  provided  by  law." 

Let  Congress  amend  the  law  of  1890,  making  it  compul- 
sory upon  the  Secretary  of  the  Treasury  to  purchase  there- 
after 180,000  ounces  of  silver  daily,  and  that  after  the 
expiration  of  twelve  months  or  on  the  first  day  of  any 
month  thereafter,  should  the  average  price  for  the  previous 
twelve  months  be  greater  than  the  average  price  for  the 
last  month  of  the  twelve  months,  the  even  ratio  next  higher 


65 

for  silver  than  said  average  price  is  to  be  the  legal  ratio  for 
silver.  The  object  is  to  allow  any  variation  in  consequence 
of  this  new  policy  to  run  its  course  before  fixing  the  first 
ratio.  If  the  average  price  for  the  last  of  the  twelve 
months  is  greater  than  the  average  price  for  the  twelve 
months,  no  new  standard  for  silver  is  to  be  fixed  until  the 
case  is  reversed.  Should  the  average  price  in  accordance 
with  the  above,  for  example,  be  found  to  be  104  the  ratio 
would  be  19  to  1,  and  a  Government  limit  put  upon  further 
purchases  of  silver  at  $1.0888  per  ounce. 

The  new  standard  obtained,  the  Government  is  to  offer 
to  purchase,  at  market  value  not  exceeding  standard  value, 
no  more  than  200,000  ounces  any  one  day,  and  all  future 
purchases  of  silver  to  be  in  like  manner  governed  by 
standard  price,  and  the  quantity  purchased  any  one  day  is 
not  to  exceed  in  ounces  the  one  three-hundredth  part  of  the 
number  representing  the  population  of  the  United  States. 
Fractional  parts  of  ten  thousand  to  be  discarded. 

Regulation  for  the  Adoption  of  a  Higher  Ratio  for 
Silver  to  Meet  a  Higher  Silver  Valuation. 
Should  the  average  daily  market  price  for  silver  for  a 
period  of  twelve  months  and  the  average  price  of  the  last 
month  of  this  period  exceed  the  standard  valuation,  the 
standard  of  the  silver  dollar  is  to  be  changed  and  to  be  of 
the  next  higher  even  ratio  for  silver. 

Regulation  for  the  Adoption  of  a  Lower  Ratio  for 
Silver  to  Meet  a  Lower  Silver  Valuation. 

Should  the  average  daily  market  price  for  silver  for  a 
period  of  twelve  months  and  the  average  price  for  the  last 
month  of  this  period  be  below  the  next  lower  even  ratio 
valuation,  the  standard  of  the  silver  dollar  to  be  changed 
and  to  be  of  the  next  higher  even  ratio  for  silver  than  this 
average  price. 

The  Government  purchases  to  be  at  all  times  made 
public,  and  at  the  close  of  every  month  the  average 
price  paid  to  be  announced.  Should  at  the  close  of  any 
month  the  average  for  the  month,  as  well  as  for  the  entire 
previous  twelve  months,  pass  the  next  lower  or  exist- 
ing even  ratio  standard,  the  standard  to  be  accordingly 
changed. 

Should  the  average  price  for  the  last  month  not  equal 
the  average  variation  for  the  last  twelve  months,  it  would 


66 

indicate  a  turn  of  the  market  value,  and  the  standard  is  not 
to  be  changed. 

In  case  the  gold  reserve  in  the  United  States  Treasury 
should  fall  below  7|  per  cent,  of  the  total  paper  circulation, 
the  standard  silver  dollar  is  to  be  increased  in  weight  to  the 
next  ratio,  and  the  purchasing  limit  for  silver  correspond- 
ingly reduced.     This  to  check  the  outflow  of  gold. 

That  On  the  adoption  of  any  new  standard  under  this 
system  silver  is  to  be  coined  into  the  new  standard,  the 
bullion  is  to  be  used  first,  then  the  coin  of  any  ratio  farthest 
removed  from  the  new  standard. 

That  all  silver  of  previous  standards  is  to  be  exchanged 
on  demand  for  the  existing  standard. 

That  for  importations  of  United  States  coin  the  Govern- 
ment is  to  deliver  in  exchange  the  same  weight  in  bullion 
against  a  charge  of  expenses  to  the  importer. 

That  no  silver  coins  whatever  are  to  be  purchased. 
Mutilated  United  States  coin  to  be  exchanged  at  relative 
value. 

That  all  silver  dollars  coined  hereafter  in  accordance 
with  this  system  are  to  bear,  in  addition  to  the  date  or  year, 
the  figure  representing  the  ratio. 

The  Government  purchases  being  at  all  times  made 
below  the  standard  value,  should  the  market  price  of  silver 
advance  beyond  this  standard  value  and  the  Government 
be  called  upon  for  silver  for  export  purposes,  a  profit  would 
be  obtained  from  such  silver. 

All  silver  bullion  and  coin  of  other  nations,  as  bullion, 
to  be  free  of  all  import  or  export  duties  or  taxes  whatever. 
Other  nations  in  adopting  this  system  would  be  guided 
by  the  market  price  of  silver,  either  in  New  York  or 
London,  and  thus  the  monetary  system  of  the  world  would 
be  a  unit. 

Silver  under  this  new  policy  having  found  its  level,  it  is 
expected  that  under  this  restricted  system  the  fluctuations 
of  silver  may  not  necessitate  a  change  of  standard  for  a 
period  of  twenty  years  or  more.  The  fluctuations  in  the 
price  of  silver  from  the  year  1830  to  1870,  a  period  of  forty 
years,  would  under  this  system  have  necessitated  no  change 
of  standard. 

As  other  nations  enter  upon  this  monetary  system,  the 
purchasing  limit  may  be  reduced  by  cost  ot  coinage,  but 


67 

the  demand  for  silver  must  necessarily  increase,  and  offer- 
ings  to  this  Government  be  less  than  the  limit  of  180,000 
ounces  per  day,  and  an  advance  in  silver  to  the  present 
standard  value  of  16  to  1  is  not  impossible  under  this  policy, 
considering  that  many  nations  are  in  need  of  an  increased 
metal  reserve,  based  on  the  gold  standard,  for  their  present 
circulation. 

The  increased  use  of  silver  this  system  would  demand 
as  nation  after  nation  would  adopt  it  would  far  exceed  the 
demand  for  silver  if  the  world  outside  of  the  principal 
European  commercial  nations  were  on  a  silver  basis,  and 
had  free  silver  coinage. 

This  system  will  forever  settle  the  silver  question,  and 
enable  nations  now  on  a  silver  or  currency  basis  to  adopt 
the  gold  standard. 

This  system  will  permit  the  unification  of  our  existing 
currency  into  a  treasury  note  issue,  payable  in  gold  or 
silver,  at  the  pleasure  of  the  holder. 

Free  coinage  of  one  metal  only  is  possible,  and  this  must 
always  be  gold,  but  the  Luttgen  Monetary  System  gives  to 
silver  the  advantage  gold  possesses,  which  free  coinage  of 
silver  would  fail  to  accomplish. 

It  is  beyond  the  power  of  the  united  action  of  the  prin- 
cipal nations  to  establish  a  permanent  ratio  of  silver  to 
gold.* 

The  following  was  published  in  November,  1892,  during 
the  session  of  the  Brussels  Conference  : 

"  The  disposition  of  the  European  governments  to  buy 
silver  could  be  so  directed  as  to  lead  to  an  absolute  and  per- 
manent solution  of  the  silver  problem.  To  purchase  silver, 
with  the  object  of  merely  taking  the  surplus  stock  out  of  the 
market,  and  so  advance  the  price  to  43  pence,  a  ratio  of  about 
22  to  1 ,  and  restore  the  rupee  to  16  pence,  and  leave  such  silver 
purchased  inactive  or  dead  in  the  vaults  of  the  respective 
governments,  would  again  put  silver  on  a  false  basis,  and 
only  delay  the  disaster  now  threatening  the  financial  world. 

*The  repeal  of  the  Sherman  Purchasing  Act  in  1893  has  been  like  one  of 
those  national  follies  which  will  at  times  take  possession  of  a  people.  In 
consequence  of  this  repeal,  the  monetary  system  of  the  country  has  been 
manipulated  by  reckless  schemers,  and  a  modern  feudal  system  has  been 
inaugurated  through  such  manipulation  of  the  currency  from  which  no  one 
has  escaped  without  paying  tribute.  The  financial  disturbances  herein 
predicted  we  have  felt  in  the  most  intense  degree. 


68 

In  purchasing  silver,  the  object  should  be  less  to  advance 
the  price  than  to  steady  the  price.  It  should  be  the  object 
to  avoid  fluctuations,  therefore  such  purchases  should  be 
made  in  uniform  daily  quantities.  The  United  States  is 
to-day  practically  buying  600  ounces  of  silver  per  annum 
for  each  700  of  population.  Should  the  European  nations 
now  represented  in  the  Monetary  Conference  agree  to  pur- 
chase 600  ounces  per  annum  for  each  3,500  of  population, 
and  not  only  until  the  price  reaches  43  pence  per  ounce,  but 
upon  the  following  basis,  the  silver  question  would  be 
solved.  This  basis  would  make  the  purchased  silver  active, 
and  not  dead — a  metal  qualified  to  settle  balances  between 
nations  finally,  not  (as  proposed  in  the  plan  of  Mr.  C.  F. 
Teitjen)  simply  between  individuals,  through  throwing  the 
burden  of  final  settlements  upon  the  governments. 

The  governments  purchasing  silver  to  issue  legal  tender 
currency  certificates  for  the  amounts  so  purchased,  payable 
in  gold  or  silver  at  the  then  existing  standard,  at  pleasure  of 
holder.  The  purchases  of  the  different  governments,  includ- 
ing the  Government  of  the  United  States,  are  to  be  limited 
in  price  to  the  price  representing  the  even  unit  ratio  to 
gold  next  higher  than  the  average  price  for  the  previous 
twelve  months,  this  even  unit  ratio  to  be  the  standard.  At 
this  even  unit  ratio  the  respective  governments  to  pay  out 
silver  on  demand.  This  may  be  in  bullion  and  not  inter- 
fere with  existing  coinages.  The  Government  when  called 
upon  for  silver  will  have  previously  purchased  this  silver 
at  less  price,  whether  on  a  declining  or  advancing  market, 
and  would  derive  a  revenue  therefrom.  Whenever,  due  to 
fluctuations,  silver  should  decline  below  this  even  unit  ratio, 
purchases  would  be  resumed.  Should  the  average  advance 
to  above  this  even  unit  value,  the  next  higher  even  unit 
standard  for  silver  would  be  adopted,  and  the  governments 
resume  purchases  and  hold  their  silver  at  such  higher  even 
ratio  standard  price.  Should  the  average  price  for  twelve 
months  decline  to  below  the  next  even  ratio  standard,  the 
standard  to  be  reduced  to  such  even  ratio  next  higher  for 
silver  than  this  average.  In  the  course  of  time  it  may  be 
found  convenient  to  coin  silver  in  accordance  with  these 
ratios,  even  if  for  foreign  settlements  only  ;  yet  also  for 
home  consumption  in  the  industrial  arts,  silver  having  over- 
come the  present  violent  fluctuations.     Silver  under  this 


69 

system  would  strengthen  the  gold  reserve.  Whether  silver 
rises  or  falls,  this  system  is  always  operative.  All  silver 
coins  imported  into  the  countries  where  coined  to  be  de- 
livered to  the  Government  as  and  in  exchange  for  bullion. 

A  further  objection  to  Mr.  Teitjen's  plan  is  that  the 
government  whose  coin  is  exported  would  stand  the  loss  in 
case  of  a  decline  in  silver  without  receiving  the  benefit  in 
case  of  any  advance. 

Pamphlet. — Silver  Purchases  Not  a  Menace  to  the  Gold 
Standard.     May  15,  1893. 

The  present  time  is  not  exempt  from  prejudices  similar 
to  those  that  have,  at  various  periods,  swept  over  the  older 
nations  of  Europe.  These  outbursts  have  invariably  been  the 
forerunners  of  reform,  and  history  will  record  the  present 
prejudices  against  the  purchase  of  silver  as  an  obstacle  in 
the  march  of  progress. 

No  practical  question  has  ever  been  before  the  world  of 
greater  importance  than  the  monetary  question  of  to-day. 

It  is  unnecessary  to  name  here,  for  the  public  need  only 
refer  to  the  papers,  the  wild  and  absurd  schemes  with  which 
the  press  has  afflicted  its  readers,  schemes  involving  every 
class  of  complication  and  always  a  "  Commission ''  whether 
local,  national  or  international. 

We  have  been  told  by  one  side  that  that  which  has  been 
tried  and  failed  is  a  success  and  need  only  be  reinstated  to 
solve  the  problem,  but  the  fallacy  of  the  fixed  ratio  of  the 
Latin  Union  was  proved  by  its  failure ;  on  the  other  hand 
we  are  told  that  it  is  not  the  laws  of  demand,  but  an  error 
of  judgment  that  has  caused  nations  to  employ  silver  in  their 
monetary  systems,  yet  no  nation  limits  its  coinage  to  gold 
alone  ;  but  sufficient  of  this.  It  is  a  solution  we  need,  and 
not  the  recounting  of  the  errors  of  the  past. 

Circumstances  have  practically  centered  the  necessity 
for  the  solution  of  the  monetary  question  of  the  world  in 
the  United  States.  A  solution  that  is  applicable  to  our  situa- 
tion here  would  thus  solve  this  problem  for  the  world. 

No  sound  financial  system  is  practicable,  except  upon  an 
absolute  gold  standard. 

No  gold  standard  can  be  maintained  without  the  aid  of 
silver,  and  silver  should  only  enter  into  practical  use  as  a 


7o 

money  metal  through  purchases  by  the  different  govern- 
ments. 

The  only  feature  in  the  Sherman  Act  entirely  consistent 
with  an  absolute  gold  standard  is  the  purchasing  of  silver. 

A  metal  to  be  a  proper  measure  of  values  must  not  be 
restricted  in  its  movements,  and  must  not  be  dependent 
upon  any  international  agreement  whatever. 

The  coining  of  money  to  be  no  burden  upon  the  Gov- 
ernment beyond  the  mint  charges. 

Unless  the  monetary  system  is  obedient  to  natural  laws 
and  admits  of  being  adopted  by  this  or  any  other  govern- 
ment alone  and  without  endangering  the  gold  standard, 
it  will  not  be  a  solution  of  the  problem. 

The  plan  must  not  involve  risks  or  doubts,  but  will  nec- 
essarily sweep  away  existing  prejudices. 

No  change  in  our  laws  can  take  place  until  Congress 
meets.  Any  possible  low  Treasury  surplus  or  deficiency 
has  no  bearing  on  the  currency  question  and  must  be  con- 
sidered separately. 

During  the  period  until  Congress  shall  meet,  each  and 
every  one  of  the  five  classes  of  notes,  as  well  as  the  silver 
coin  now  outstanding,  should  be  paid  in  gold  when  pay- 
ment is  demanded  ;  for  this  purpose  the  $100,000,000  of 
gold  reserve  should  be  fearlessly  exchanged  for  paper ; 
when  this  amount  has  been  reduced  to  about  $50,000,000, 
the  other  $50,000,000  being  represented  by  a  deposit  of 
notes  now  outstanding,  it  will  be  time  enough  to  replenish 
the  gold  by  the  selling  of  bonds  ;  but  such  a  condition  is 
not  likely  to  occur,  for  the  Government  holds  a  second 
$100,000,000  in  gold,  represented  by  gold  certificates;  75 
per  cent,  of  this  can  previously  be  safely  exchanged  for  any 
of  the  outstanding  currency. 

The  credit  of  the  Government  is  undoubted.  Nobody 
doubts  the  intention  and  ability  of  the  Government  to 
carry  out  explicit  contracts  whether  100  per  cent,  or  25 
per  cent,  of  reserve  on  these  deposits  is  kept  on  hand.  It 
is  therefore  absurd  to  hold  100  per  cent,  of  these  special 
deposits  on  hand  while  the  national  banks  are  required  to 
hold  but  25  per  cent,  reserve  of  their  deposits ;  the  Gov- 
ernment would,  therefore,  have  $125,000,000  of  gold  now 
on  hand  which  can  be  safely  exchanged  for  outstanding 
paper  before  any  measure  to   replenish  gold  will  become 


7i 

necessary  ;  but  this  should  not  be  done  by  the  selling  of 
bonds,  but  by  bringing  silver  up  to  the  gold  standard. 

Pamphlet. — The    Luttgen    Monetary   System.    July    12, 
1893. 

Its  object  to  strengthen  and  extend  the  Gold  Standard 
throughout  the  world  with  Silver  as  a  supplementary  In- 
ternational Monetary  Metal. 

Silver  purchases  under  this  system  not  a  menace  to  the 
Gold  Standard. 

The  author  begs  to  present  to  the  public  the  result  of 
many  years  of  study  at  the  expense  of  valuable  time  and 
money,  a  simple  and  natural  remedy  for  our  present  finan- 
cial troubles  and  for  avoiding  in  future  the  monetary  dis- 
turbances that  the  varying  relations  between  gold  and  sil- 
ver have  cost  the  world  for  centuries  back. 

The  author  in  this  treatise  will  carefully  avoid  all  sta- 
tistics of  which  the  public  has  already  a  confusing  abund- 
ance, but  will  apply  the  system  to  our  present  position  in 
the  United  States  in  a  plain,  practical  business-like  manner 
and  in  the  form  of  suggesting  the  required  legislation. 

The  two  metals  are  to-day  as  essential  for  the  world's 
money  as  they  have  been  in  the  past,  which  their  use  then 
demonstrated.  These  two  metals,  however,  have  never 
been  placed  in  the  right  relation  to  each  other ;  experi- 
ments of  every  nature  by  nations  singly  and  jointly  have 
been  tried  without  success,  for  the  simple  reason  that  Na- 
ture's laws  were  ignored. 

The  Luttgen  Monetary  System,  therefore,  does  not 
restore  these  metals  to  any  former  condition,  but  creates  a 
new  harmonious  relation  that  has  never  before  existed.  It 
attempts  no  radical  changes,  but  directs  the  present  prac- 
tices to  perfection.  To  accomplish  such  great  results,  the 
system  employs  new  but  simple  methods  never  advanced 
before  to  perfect  the  money  system  of  the  world  for  all 
time  to  come. 

Bimetallism  is  a  term  frequently  used,  but  misapplied 
and  not  understood,  for  bimetallism  has  only  been  at- 
tempted;  it  has  never  existed  in  practice.  It  is  estab- 
lished by  following  laws  of  Nature  and  not  by  an  arbitrary 
ratio. 


72 

The  currency  of  the  world  is  bimetallic.  Nature  estab- 
lishes the  ratio  between  the  gold  standard  of  one  country 
and  the  silver  standard  of  another,  but  the  fluctuations  be- 
tween these  standards  cause  an  unnecessary  high  cost  for 
foreign  necessaries  of  life.  This  system  will  overcome 
this,  for  by  its  means  a  gold  standard  will  be  introduced 
throughout  the  world  creating  a  uniform  standard  and  re- 
storing both  metals  to  more  equal  and  general  monetary  use. 

I  would  suggest  the  following  definition  for  bimetallism 
or  double  standard  :  "  Silver  as  money  so  adjusted  to  the 
gold  standard  that  its  intrinsic  value  will  permit  ultimate 
settlements  between  nations  thereby,"  or  "an  inferior 
money  metal,  adjusted  as  above  to  the  superior  money 
metal." 

This  system  introduces  an  improvement,  the  advantage 
of  which  to  the  world  cannot  be  overestimated. 

The  world's  monetary  standard  is  gold  aided  by  silver. 

Free  silver  coinage  is  antagonistic  to  the  world's  standard. 
A  fixed  ratio  is  a  sham,  but  to  stop  the  purchase  of  silver 
would  be  to  upset  the  world's  standard  with  evil  results 
beyond  the  present  conception  of  any  one,  for,  by  faith, 
silver  on  its  false  basis  of  the  past  yet  supplies  half  the 
money  of  the  world.  The  stock  of  gold  in  the  world  is 
only  about  $2.50  per  capita,  and  the  commercial  world  is 
increasing  rapidly  and  may  soon  cover  the  entire  popu- 
lation. 

It  would  indeed  be  a  bold  financier  who  would  advocate 
by  repealing  the  silver  purchase  law  to  abandon  silver ;  his 
life  as  a  financier  would  be  cut  short. 

The  battle-cry  of  prejudice  to-day  is  "stop  the  purchas- 
ing of  silver."  Last  year  it  was,  "  The  silver  question  must 
be  settled  by  international  agreement,"  and  then  public  and 
prominent  men  were  as  anxious  to  put  themselves  on 
record  on  the  side  of  prejudice  as  they  are  now. 

That  our  financial  policy  is  defective  there  can  be  no 
doubt.  It  has  been  used  by  speculators  to  create  distrust 
when  no  danger  existed,  but  this  is  no  defence;  a  system 
that  will  admit  of  being  used  thus  is  wrong.  While  there 
is  no  danger  imminent,  the  system  would  finally  lead  to 
disaster  and  must  be  changed. 

Blind  prejudice  has  attacked  the  only  feature  in  the 
Sherman  act  entirely  consistent  with  the   gold  standard  : 


73 

"The  purchasing  of  silver  by  the  Government."  It  is  not 
the  purchasing  of  this  silver  at  the  present  low  figure  nor 
the  limited  increase  of  currency  that  presents  the  danger ; 
for,  under  the  present  circumstances,  the  purchasing  of 
silver  would  rather  improve  the  situation,  for  every  intelli- 
gent mind  must  understand  that  the  ratio  of  16  to  i  cannot 
be  maintained.  Where,  then,  is  the  danger  ?  It  is  not  that 
the  credit  of  the  Government  has  suffered,  for  its  4  per 
cent,  bonds  are  selling  at  about  no,  with  money  worth 
fully  7^  per  cent.  This  expresses  faith  in  the  intention  and 
ability  of  the  Government  to  carry  out  its  explicit  contracts. 
What,  then,  are  its  contracts  as  regards  the  currency  circu- 
lation ?  By  the  act  of  1890,  the  Government  gave  the 
pledge  to  maintain  the  parity  of  gold  and  silver,  and  prac- 
tically, if  necessary,  to  establish  by  law  such  ratio  as  would 
effect  this ;  but  the  Government  has  cast  doubt  on  its  own 
intention  by  continuing  to  reissue  gold  certificates.  If 
every  note  is  payable  in  gold,  for  what  purpose  these  special 
certificates?  The  Government  is  basing  its  currency  on 
gold,  and  then  issues  gold  certificates  to  prevent  the  gold 
in  the  country  lrom  acting  as  a  reserve  for  such  currency 
and  to  facilitate  private  hoarding  of  gold.  This  situation  is 
aggravated  by  reissuing  the  silver  certificates.  In  1887  a 
law  was  proposed  substituting  coin  certificates  for  gold  and 
silver  certificates.  It  is  to  be  regretted  that  that  law  was 
not  enacted  in  1890  to  confirm  the  Government's  intentions 
as  expressed  in  the  Sherman  law.  With  faith  in  the  inten- 
tion and  ability  on  the  part  of  the  Government  to  pay  all 
notes  in  gold,  the  several  issues  become  in  practice  equiva- 
lent to  the  gold  certificates,  and  if  one  uniform  treasury 
issue  now  existed,  the  $200,000,000  in  gold  now  in  the 
Treasury  would  be  a  satisfactory  reserve  for  the  entire 
issue ;  there  would  be  no  cause  yet  to  create  alarm.  The 
gold  certificates  constitute  part  of  the  currency  of  the 
country. 

The  gold  certificates,  therefore,  deprive  the  currency  of  a 
part  of  its  proper  reserve,  and  to  hold  the  purchased  silver 
above  its  value  deprives  the  currency  of  a  further  reserve 
to  which  it  is  justly  entitled.  These  are,  then,  the  faults  in 
our  money  system  and  not  "  the  purchasing  of  silver." 

It  is  nothing  less  than  a  great  wrong  on  the  part  of  the 
Government  to  deprive  the  nation  of  the  product  of  labor 


74 

in  a  great  industry  by  holding  500,000,000  ounces  of  silver 
above  the  market  value.  While  so  held  it  is  equivalent  to 
being  destroyed,  and  it  will  not  recover  any  value  until  it 
becomes  accessible  at  the  market  rate.  The  depreciation 
and  losses  in  the  present  panic  are  estimated  at  $1,500,000,- 
000.  A  portion  of  this  loss,  and  an  amount  at  least  fully 
equal  to  the  amount  of  silver  in  the  hands  of  the  Govern- 
ment, could  have  been  avoided  under  all  circumstances  if 
this  silver  had  been  held  as  a  currency  reserve  at  the 
market  value.  Any  efforts  to  destroy  the  confidence  in  the 
currency  would  then  have  failed. 

Are  the  mine  owners  of  the  West  willing  that  the  Gov- 
ernment should  pay  them  $500,000,000  for  idle  labor  in 
charity,  without  giving  the  Government  an  equivalent? 
This  is  the  position  they  place  themselves  in  by  destroying 
the  product  of  their  labor  in  compelling  the  Government 
to  hold  this  product  above  its  market  value.  Why  should 
the  nation  pay  them  for  that  which  has  no  value?  It  is  not 
only  the  loss  of  this  commodity,  or  an  idle  expenditure  of 
labor  to  the  amount  of  $500,000,000,  but  this  worthless 
silver — worthless  through  being  held  above  its  market 
value — has  been  put  into  a  position  of  semblance  of  money 
at  one  and  a  half  times  its  value,  thereby  creating  distrust 
and  affecting  the  value  of  every  commodity  in  the  land. 

The  writer  has  the  highest  confidence  in  the  honor  of 
the  people  of  the  United  States,  without  exception,  and 
believes  that,  having  received  a  practical  illustration  (an 
object-lesson)  that  the  silver  in  the  Treasury  is  worse  than 
worthless,  held  at  its  present  standard,  measures  will  at 
once  be  taken  to  restore  it  to  the  market  and  give  it  value 
again. 

This  system  could  at  once  be  put  into  full  operation, 
confidence  restored,  the  gold  standard  firmly  and  absolutely 
established,  and  silver  purchases  continued  at  the  uniform 
daily  quota  of  180,000  ounces. 

Congress  appropriated  $80,000  for  the  expenses  of  the 
Monetary  Conference.  If  this  sum  had  been  offered  as  a 
premium  for  a  solution  to  our  situation,  this  panic  would 
never  have  taken  place.  The  question  would  have  been 
solved  before  the  expiration  of  the  Fifty-second  Congress. 

The  Government  must  not  suffer  loss  in  restoring  this 
silver   to   activity.      The    greatest    conservatism   must  be 


75 

exercised  in  every  action  on  the  part  of  the  Government 
affecting  the  monetary  system,  for  the  entire  wealth  of  the 
nation  is  affected  thereby. 

The  impossibility  of  the  two  metals  being  used  inde- 
pendently of  each  other  being  recognized,  and  to  establish  a 
firm  and  absolute  gold  standard,  all  idea  of  a  fixed  weight 
for  the  silver  coin  must  be  abandoned  as  entirely  inconsist- 
ent, not  only  with  the  gold  standard,  but  with  the  liberal 
employment  of  silver,  and  in  this  lies  the  solution  of  the 
world's  monetary  trouble. 

The  two  half  silver  dollars  in  your  pocket  do  not  weigh 
as  much  as  the  whole  silver  dollar,  yet  this  does  not  agitate 
you,  for  the  Government  will  redeem  them  alike.  In  the 
same  manner  you  should  not  care  whether  two  whole  dollars, 
or  two  pieces  of  any  other  silver  coin,  are  of  equal  weight, 
for  the  Government  will  give  gold  for  them  at  all  times. 

The  author  has  had  the  following  difficult  problem  to 
solve :  First,  to  strengthen  the  gold  standard.  Second,  to 
ensure  a  liberal  employment  of  silver.  Third,  to  bring  the 
large  stock  of  silver  the  Government  holds  at  a  high  cost, 
practically,  to  the  market  value,  without  the  loss  to  the 
Government.  Fourth,  to  strengthen  and  increase  the  gold 
reserve,  not  through  the  selling  of  bonds,  but  by  means  of 
the  silver  on  hand,  and  by  a  safety  fund  established  for  that 
purpose.  Fifth,  to  create  a  means  of  outflow  of  the  silver 
from  the  Treasury  without  the  loss  to  the  Government,  and 
by  means  of  not  only  the  standard  silver  dollar,  but  by  the 
subsidiary  coinage  as  well.  Sixth,  to  create  a  system  ac- 
complishing these  facts  automatic  in  its  operation,  and 
applicable  to  all  future  times  and  conditions.  Seventh,  to 
encourage  the  holding  of  silver  by  banks  and  the  public. 

The  solution  offered  for  a  problem  of  such  gravity  will 
require  careful  study,  and,  upon  acquaintance,  the  simplicity 
of  the  system  will  be  discovered. 

With  these  remarks  I  will  now  proceed  to  suggest  the 
necessary  legislation. 

LEGISLATION  SUGGESTED.— THE  UNIFICA- 
TION OF  THE  CURRENCY. 

The  outstanding  paper  circulation  of  the  United  States 
is,  in  round  figures,  $1,100,000,000,  represented  as  follows  : 


76 

Gold  certificates $100,000,000 

Silver  certificates $325,000,000 

Treasury  notes 150,000,000        475,000,000 

United  States  legal  tender  notes $350,000,000 

National  Bank  notes 175,000,000         525,000,000 

Total $1, 100,000,000 

Against  which  the  Treasury  holds  about  $200,000,000  in 
gold,  or  equal  18  per  cent,  reserve,  with  fluctuations  vary- 
ing this  reserve  1  or  2  per  cent.  Omitting  National  Bank 
notes,  the  Treasury  would  hold  to-day  a  reserve  of  over  20 
per  cent,  in  gold. 

That  Congress  enact  a  law  to  exchange  a  legal  tender 
United  States  note,  payable  in  gold  or  silver,  at  option  of 
holder,  for  all  outstanding  Government  certificates,  notes, 
gold  coin  and  silver  coin,  when  presented  for  exchange. 

And  further,  for  the  better  carrying  out  of  the  provisions 
of  Act  of  July  14,  1890,  to  maintain  gold  and  silver  on  a 
parity,  and  for  such  purpose  to  regulate  the  ratio  of  the 
standard  silver  dollar,  and  for  the  purpose  of  maintaining 
a  proper  gold  reserve  to  protect  the  fixed  gold  standard  of 
value  of  the  United  States. 

Let  it  be  enacted  that  the  ratio  of  the  standard  silver 
dollar  be  determined  by  the  cost  of  the  bullion,  but  to  be 
always  of  an  even  unit  ratio  with  gold,  and  to  be  further 
regulated  in  accordance  with  this  system,  and  that  it  shall 
be  the  duty  of  the  Secretary  of  the  Treasury  to  restore  all 
silver  on  hand,  whether  coined  or  bullion,  to  its  original 
purchase  cost  price  by  recovering  from  the  Treasury  such 
gross  seigniorage,  or  so-called  gross  profit,  on  the  coinage 
of  silver  since  the  Act  of  1878  as  may  have  been  appro- 
priated for  other  purposes. 

If  the  revenue  receipts  do  not  admit  of  this  restoration, 
the  Secretary  of  the  Treasury  to  be  authorized  to  set  aside 
bonds  to  the  amount  necessary  for  this  object ;  the  Secre- 
tary to  be  also  directed  to  classify  the  silver  as  to  cost,  for 
every  even  unit  ratio  price  and  charging  the  silver  such 
full  even  unit  ratio  prices,  and  the  difference  between  these 
ratio  prices  and  any  lower  cost  to  be  credited  to  a  Silver 
Safety  Fund  account.  The  object  of  this  Silver  Safety  Fund 
is  to  have  the  means  at  hand  to  protect  the  gold  reserve  in 
case  of  extreme  necessity. 


77 

The  silver  dollar  outstanding,  but  not  exported,  of  what- 
ever weight,  shall  at  all  times  be  full  legal  tender  to  any 
amount,  and  may  be  exchanged  at  option  of  holder  at  any 
United  States  Subtreasury  for  any  United  States  monetary 
issue,  whether  gold,  legal  tender  notes,  or  silver  of  current 
standard,  or  subsidiary  coin,  and  all  such  issues  to  be  at  all 
times  interchangeable  at  option  of  holder. 

For  the  purpose  of  illustration,  the  Government  holds, 
coined  or  in  bullion,  silver  to  the  amount  of  $475,000,000. 
Of  this  say — 

$25,000,000  costing,  not  exceeding  the  ratio  of. .  25  or    82. 74  per  oz 

50,000,000  "  "  ..24  or    86.19 

75,000,000  "  "  "  ..23  or    89.94 

75,000,000  "  "  ..22  or    94.03 

50,000,000  "  "  "  ..21  or    98.43 

50,000,000  "  "  ..20  or  103.43 

50,000,000  "  "  "  ..19  or  108.88 

75,000,000  "  "  "  ..18  or  114.83 

25,000,000  "  "  "  ..17  or  121.68 


$475,000,000 Total. 

Suppose  the  profit  at  these  prices  credited  to  Silver 
Safety  Fund  to  amount  to,  say,  $12,500,000. 

The  market  for  silver  being  below  the  ratio  of  25  to  1, 
let  it  be  enacted  that  the  present  standard  of  the  silver  dol. 
lar  shall  be  at  the  ratio  of  25  to  1  to  the  extent  of  the 
bullion,  costing  not  exceeding  82  T7¥47  per  ounce,  and, 
until  another  standard  takes  effect  according  to  the  pro- 
visions of  this  system,  that  the  silver  dollar  and  other  silver 
coins  shall  at  all  times  be  of  the  same  circumference  as  at 
present,  the  difference  in  weight  being  represented  in  the 
thickness  of  the  coin. 

These  two  amendments  or  laws  would  at  once  re-estab- 
lish confidence  in  our  currency  and  create  a  reserve  on  the 
gold  basis  of  about  30  per  cent,  on  the  $925,000,000  out- 
standing. What  better  position  could  be  desired  ?  The 
reserve  would  be  as  follows  : 

Gold,  say $192,500,000,  or  about  21  per  cent. 

Silver  at  71  ^5- 85,000,000     "  9 

Total $277, 500,000,  or  about  30  per  cent. 


78 

There  would  be  in  the  Silver  Safety  Fund  $12,500,000 
to  lower,  if  necessary  to  protect  the  gold  reserve,  the  price 
of  the  following  silver  to  71  y3^  per  ounce,  and  this  would 
require  $12,143,500,  as  follows  : 

$25,000,000  cost  82.74;  reduction,  n. 41  per  ounce $2,852,500 

50,000,000    "   86.19,  "         14.86       "  7,430,000 

10,000,000     "   89.94,  "         18.61        "  ....    1,861,000 

$85,000,000  Total $12,143,500 

The  subsidiary  coin  now  in  the  hands  of  the  United 
States  Treasury  and  in  circulation,  to  be  issued  and  re- 
issued, but  to  make  silver  active,  future  subsidiary  coinage 
to  be  of  one  ratio  higher  for  silver  than  the  standard  silver 
dollar  current  at  the  time  ;  while  the  ratio  is  25  to  1,  sub- 
sidiary coin  to  be  coined  24  to  1,  and  the  profit  between 
the  cost  of  82.74  and  86.19  to  be  credited  to  the  Silver 
Safety  Fund. 

All  silver  coin  coined  hereafter  to  bear  in  addition  to 
date  or  year  the  figure  representing  the  ratio. 

The  Act  of  1890  as  to  the  purchasing  of  silver  to  be  so 
far  amended  as  to  require  these  purchases  to  be  made  in 
the  uniform  daily  quantity  of  180,000  ounces  for  each  busi- 
ness day,  and  price  to  be  limited  to  the  standard  price 
then  existing. 

All  purchases  to  be  charged  to  silver  purchase  account 
at  the  even  ratio,  and  difference  to  be  at  once  credited  to 
Silver  Safety  Fund  account. 

Should,  on  a  declining  market,  on  the  first  day  of  any 
month,  the  average  price  for  silver  of  the  previous  twelve 
months  be  below  the  even  unit  ratio  next  above  the  average 
price  of  the  last  month,  such  ratio  to  be  the  standard. 

Should  the  average  daily  market  price  for  silver  for  a 
period  of  twelve  months,  and  the  average  price  of  the  last 
month  of  this  period,  exceed  the  standard  valuation,  the 
standard  of  the  silver  dollar  should  be  changed,  and  to  be 
of  the  next  higher  even  ratio  for  silver  than  this  twelve 
months'  average.  No  purchases  to  be  made  above  the 
standard. 

Provided,  however,  should  the  gold  reserve  be  below  \j\ 
per  cent.,  the  standard  to  be  changed  in  like  manner  on  six 
months'  average,  and  with  gold  reserve  below  12^  per  cent. 


79 

in  like  manner  on  three  months'  average  ;  if  the  gold  reserve 
declines  below  7^  per  cent.,  the  Silver  Safety  Fund  to  be 
drawn  upon  to  lower  silver  to  the  even  standard  next 
below  the  market.* 

October  15,  1893. 
Mr.  Fred'k  Wm.  Luttgen, 

New  York. 

Dear  Sir, — Your  favor  of  the  13th  inst.  is  at  hand.  I 
read  your  pamphlet,  as  I  read  your  letter,  with  interest. 
The  chief  trouble  with  your  proposition  is  that  the  enemies 
of  silver,  who  are  in  the  majority,  will  not  accept  it. 

Yours  very  truly, 

Edward  O.  Wolcott. 

Pamphlet. — The  Luttgen  Monetary  System.    October  18, 
1893. 

The  Luttgen  Monetary  System  is  the  result  of  many 
years  of  careful  study,  both  here  and  in  Europe,  to  bring 
about  the  natural  solution  of  the  world's  monetary  problem. 
This  solution  would  incorporate  every  advantage  possessed 
in  either  of  the  three  systems  based  on  gold,  silver  or 
paper,  without  any  of  the  disadvantages  which  are  the 
necessary  accompaniment  of  each  or  any  two  of  these  three 
svstems  when  used  alone. 

The  Luttgen  Monetary  System  presents  a  ground  upon 
which  both  sides  can  unite,  and  offers  to  all  who  have  the 
public  honor  and  welfare  at  heart  every  advantage  for 
which  they  have  been  striving. 

The  purchase  of  silver  under  the  Luttgen  Monetary 
System  will  be  upon  an  established  statutory  gold   basis, 

*Since  the  above  was  published,  July  12,  1893,  through  the  repeal  of  the 
Purchasing  Act,  silver  has  declined  further,  but  the  principle  of  the  safety 
fund  would  remain  the  same,  and  be  equally  operative.  If  purchases  were 
resumed  at  present,  silver  would  materially  advance  at  once  and  certainly 
reach  the  value  of  71.33  cents  per  ounce  given  above. 

My  suggestion  as  to  the  establishment  of  branch  banks  has  since  been 
followed  by  the  President  and  Treasury  officials,  but  the  mistake  is  being 
made  of  recommending  these  branch  banks  to  be  established  in  small 
towns,  or  where  no  banking  facilities  exist,  while  on  the  contrary,  they 
should  be  established  in  the  largest  commercial  centers  of  each  State,  or  in 
such  centers  of  population  as  the  banks  may  find  profitable.  It  is  an  ex- 
tremely narrow  view  of  finances  to  suggest  that  banks  shall  establish 
branches  in  villages.  It  is  on  a  par  with  the  statistician,  who  wishes  to 
solve  the  money  problem  by  restricting  the  coinage  of  small  gold  or  the 
issue  of  notes  of  small  denomination. 


8o 

with  coinage  on  the  basis  of  gold  value,  and  have  nothing 
whatever  in  common  with  the  present  dangerous  practice. 

The  Luttgen  Monetary  System  will  put  the  gold  stand- 
ard upon  an  absolutely  firm  basis,  which  has  never  been  the 
case  since  the  existence  of  our  Government. 

The  Luttgen  Monetary  System  will  re-establish  silver 
permanently  to  a  greater  use  and  activity  as  a  money  metal 
than  at  any  previous  period. 

The  Luttgen  Monetary  System  will  make  the  silver  of 
the  world  active,  not  a  burden,  as  it  is  at  present  in  the 
United  States,  France,  Germany,  Holland  and  other  coun- 
tries. 

The  pending  bill  for  the  repeal  of  the  purchasing  of 
silver  under  the  Sherman  Act  would  have  the  effect : 

First. — Of  leaving  our  standard  currency  without  satis- 
factory reserve.  The  failure  of  proper  legislation,  it  is 
feared,  would  create  renewed  distrust,  and  would  justify 
the  hoarding  of  gold  for  self-protection. 

Second. — It  would  force  the  necessity  of  an  acquisition  of 
gold  by  the  Government.  This,  if  attempted  at  the  expense 
of  burdening  the  taxpayer  through  the  sale  of  bonds  here, 
would  fail  in  its  object,  for  the  gold  would  again  be  with- 
drawn as  soon  as  paid  to  the  Government.  If  attempted 
through  the  sale  of  bonds  abroad,  the  result  would  be 
equally  doubtful,  and  it  would  subject  our  monetary  system 
yet  more  to  the  influence  of  our  creditor  nations  ;  and,  fur- 
thermore, would  be  likely  to  excite  distrust  on  the  part  of 
Europe  in  the  large  amount  of  silver  yet  artificially  used 
there  as  money,  and  cause  a  scramble  for  gold  in  Europe, 
with  disastrous  effect  far  beyond  conception. 

Should  the  acquisition  of  gold  be  attempted  through 
the  sale  of  a  large  portion  of  the  silver  now  in  the  vaults  of 
the  Government,  silver  would  be  discredited  to  such  an  ex- 
tent that,  not  only  our  mining  interests,  but  largely  our 
railroad  interests  in  the  west,  would  be  ruined,  and  the 
danger  of  a  gold  panic  would  face  us  in  this  case  also. 

The  scarcity  of  gold  is  not  a  question  open  to  argument 
with  those  at  all  familiar  with  English  and  continental 
finances. 

The  compromises  so  far  proposed  would  lessen  confi- 
dence, for  they  embody  the  continued  coinage  of  silver  at 
a  ratio  of   16  to  i,  and  even  threaten  the   coinage  of  the 


8i 

seigniorage.  No  more  fatal  step  to  destroy  confidence 
could  be  taken.  They  also  embody  great  inconveniences  to 
the  public  by  the  proposed  withdrawal  of  small  notes.  The 
increase  of  circulation,  whether  by  silver  on  a  false  ratio  or 
by  paper  of  whatever  nature,  would  make  our  limited  gold 
reserve  disappear  entirely,  and  with  it  the  parity  of  our  dif- 
ferent moneys. 

Inactive  silver  is  a  burden  to  any  country.  Silver  at  a 
fictitious  ratio,  as  16  to  i,  or  15^  to  1,  is  useless;  it  is  fiat 
money.  Paper  would  answer  the  same  purpose  and  not 
deprive  the  nation  from  realizing  upon  one  of  its  valuable 
resources. 

The  United  States,  France  and  other  countries  had 
better  sell  their  silver  than  to  hold  it  at  a  fictitious  value, 
but  under  the  Luttgen  Monetary  System  the  entire  stock  of 
silver  in  the  hands  of  our  Government  would  become  ac- 
tive and  without  loss  to  the  Government,  become  a  satis- 
factory reserve,  like  gold,  for  all  our  currency,  and  the 
purchase  of  silver  in  equal  daily  quantities,  and  the  coinage 
of  the  same  at  its  market  value,  as  in  the  case  of  gold, 
would  continue  forever. 

Under  the  Luttgen  Monetary  System  there  will  be  no 
necessity  for  the  sale  of  bonds,  nor  for  the  sale  of  silver,  nor 
for  the  withdrawal  of  small  notes,  for  under  the  movable 
ratio  of  silver,  silver  will  practically  equal  gold,  gold  will 
flow  into  the  United  States  Treasury  unasked,  and  silver 
demanded  therefor. 

Under  the  primitive  system  of  free  coinage  of  both  sil- 
ver and  gold  prior  to  1873,  the  fixed  ratio  for  silver  ap- 
proximated the  market  value,  yet  at  times  gold,  at  times 
silver,  would  be  demonetized  by  the  market  fluctuations  re- 
gardless of  statutory  laws,  causing  severe  disturbances,  not 
only  in  the  monetary  system  of  the  countries  where  such 
fixed  ratios  existed,  but  also  in  their  foreign  relations.  But 
under  this  system  such  fluctuations  are  assumed  by  the  re- 
spective governments  and  not  felt  by  the  mercantile  com- 
munity. Under  the  old  ratio,  when  silver  sold  above  gold, 
it  was  withdrawn,  but  under  this  system  but  a  limited 
amount  can  be  withdrawn  before  the  ratio  is  automatically 
changed. 

The  market  fluctuations  under  the  then  fixed  ratios  for 
silver,  although  limited  to  perhaps  2  or  3  per  cent.,  was  the 


82 

cause  of  demonetizing  silver  by  one  nation  after  another. 
Who  would  attempt  to  fix  a  ratio  to-day,  subject  to  less 
market  fluctuations  than  prior  to  1873  ? 

To  inaugurate  the  Luttgen  Monetary  System  at  once, 
that  full  confidence  may  be  immediately  restored,  the  stand- 
ard silver  dollar  at  present  should  be  of  the  ratio  of  26  to 
1,  to  the  extent  of  silver  purchased  below  the  correspond- 
ing price  of  79.56  per  ounce,  and  the  daily  purchase  of  sil- 
ver of  180,000  ounces  to  be  limited  to  the  standard  price. 
Future  ratios  to  be  regulated  according  to  the  rules  of  the 
Luttgen  Monetary  System  under  which,  in  case  the  aver- 
age price  for  a  period  of  twelve  months  should  be  below 
76.62,  the  ratio  27  to  1  would  be  established.  But  this  sys- 
tem will  advance  the  price  of  silver,  and  do  this,  not  upon 
an  artificial  basis,  but  due  to  silver  having  been  made  ac- 
tive and  demand  created  therefor.  Our  Government  would 
receive  the  greatest  benefit  from  such  an  advance,  having  a 
greater  interest  at  stake  than  any  of  the  mining  States  of 
the  West. 

The  seigniorage  arising  from  coining  at  even  unit  ratios 
only  to  constitute  a  safety  fund  by  means  of  which,  in  case 
of  a  sudden  decline,  a  sufficient  coinage  for  all  demands  will 
be  brought  to  the  gold  basis  before  purchases  at  the  lower 
figure  have  been  made. 

There  will  be  no  necessity  for  recoining  the  present 
coinage  of  16  to  1,  but  the  same  will  be  stored  as  bullion, 
for  50  per  cent,  of  the  stock  of  silver  can  be  safely  esti- 
mated as  a  reserve  that  demands  of  commerce  will  never 
disturb. 

Many  honestly  believe  that  silver,  when  brought  into 
active  use,  will  rise  in  value  to  the  ratio  of  16  to  1.  Be  this 
as  it  may,  the  Luttgen  Monetary  System  will  admit  of  its 
so  doing,  and  it  would  create  no  disturbances  under  this 
system  should  it  fail  to  do  so. 

When  silver  advances  above  the  standard  price,  pur- 
chases would  be  suspended  and  the  previous  coinage 
absorbed.  On  the  other  hand,  when  silver  declines,  pur- 
chases continue  uninterruptedly. 

The  Luttgen  Monetary  System  will  recommend  itself  to 
all  nations,  and  may  be  adopted  by  any  nation  independ- 
ently of  every  other  nation,  and,  unless  European  nations 
will  follow  us  promptly  in  adopting  the  same,  it  would  have 


83 

the  tendency  of  withdrawing  their  gold  into  our  Govern- 
ment vaults. 

The  present  panic,  serious  as  it  is,  has  also  developed  an 
amusing  side.  We  find  men's  minds  in  utter  confusion;  ab- 
surdities expressed  and  advocated  that,  were  like  measures 
advanced  in  connection  with  subjects  better  understood,  the 
authors  would  be  considered  fit  subjects  for  an  asylum.  We 
find,  for  instance,  a  man  in  favor  of  repeal  advocating  the 
coinage  of  the  present  seigniorage  ;  another  favors  repeal 
and  the  extension  of  gold  certificates.  Omitting  reference 
to  the  hundreds  of  absurdities  as  to  restrictions  of  gold 
coinage,  restrictions  of  notes,  protection  of  American  sil- 
ver, bond  issues,  etc.,  etc.,  the  quoting  of  the  bullion  value 
of  the  silver  dollar  is  mischief  rather  than  folly. 

Under  this  system  gold  would  flow  into  the  Treasury 
naturally,  but  legal  tender  notes  should  be  issued  for  gold 
on  demand. 

Do  not  let  us  commit  the  folly  of  coining  the  present 
nominal  seigniorage,  or  of  continuing  the  practice  of  gold 
certificates  ;  renewed  hoarding  of  gold  must  be  the  natural 
consequence. 

In  connection  with  the  proposed  compromises  the  im- 
pression is  gaining  that  among  the  advocates  of  repeal  an 
element  exists  that  will  oppose  any  measure  not  finally  ne- 
cessitating the  issue  of  bonds,  and  that  the  proposition  to 
continue  the  coinage  of  silver  at  16  to  i,  and  the  purchase 
of  the  same  for  twenty  months  longer,  is  an  attempt  to  se- 
cure later  the  consent  of  the  friends  of  silver  to  the  issue  of 
bonds.  Such  a  condition  would,  even  more  than  the  pres- 
ent condition,  necessitate  either  the  issue  of  gold  bonds  and 
the  unnecessary  burdening  of  the  tax-payer  thereby,  or 
force  the  silver  standard. 

What  benefit  is  it  to  silver  or  to  the  mining  States  to 
agree  to  abandon  silver  after  twenty  months?  The  issue  of 
bonds,  except  for  a  deficit,  should  not  be  countenanced. 
The  only  safety  to  our  monetary  system  is  in  putting  silver 
upon  such  a  basis  that  silver  in  itself  will  be  a  satisfactory 
reserve  for  a  gold  standard. 

The  great  advantage  of  this  system  is  the  outlet  for 
silver  through  the  advance  of  a  limited  coinage  to  a  prem- 
ium above  gold  without  thereby  demonetizing  silver,  yet 
interfering  with  the  export  of  gold  and  encouraging  the 


84 

imports  of  gold.  The  change  of  standard  in  the  silver 
dollar  will  not  affect  the  public,  and  will  be  merely  a  me- 
chanical operation  on  the  part  of  the  Government.  Any 
silver  coin  that  may  find  its  way  into  circulation  will  at  all 
times  be  legal  tender  to  any  amount  and  exchangeable  by 
the  Government  for  gold  on  demand.* 

IN  THE  "  EMPIRE   OF    FINANCE   AND    TRADE," 

MARCH  3,  1894. 

Before  entering  upon  the  solution  of  our  financial  ques- 
tion, it  would  be  well  to  cast  a  glance  at  recent  events  and 
at  the  present  position  of  this  question  in  the  extreme  sec- 
tions of  our  country  to  show  that  all  interests  can  be  har- 
monized upon  one  system. 

Under  a  fixed  ratio  for  silver  we  have  been  issuing  paper 
money  since  1878,  measured  in  quantity  by  certain  silver 
purchases.  As  this  amount  of  paper  increased  and  the 
price  of  silver  declined,  doubts  of  our  ability  to  maintain 
the  gold  standard  were  created.  In  1892  the  national  as 
well  as  every  State  platform  of  all  political  parties  recog- 
nized the  necessity  of  employing  both  metals,  not  only  to 
create  a  sufficient  basis  for  the  money  required  by  the  de- 
mands of  commerce,  but  also  for  the  welfare  of  the  nation. 
In  opposition  to  the  will  of  the  people  as  expressed  in  these 
platforms  (no  party  daring  to  make  this  an  issue  at  the 
election  of  1892),  an  extra  session  of  Congress  was  called  to 
repeal  the  silver  purchasing  act  in  place  of  providing  the 
remedy  needed  to  restore  confidence  and  prosperity,  which 
a  continuance  of  the  silver  purchases  with  a  correction  of 
the  ratio  would  have  produced  as  an  immediate  result.  This 
action  on  the  part  of  Congress  has  caused  the  nation  already 
untold  losses.  It  has  directly,  through  the  stoppage  of 
mines,  brought  many  railroads  into  receivers'  hands,  has 
suspended  interests  and  dividends,  and  has  prolonged  and 
intensified  the  general  prostration  of  business. 

*Time  has  proved,  as  herein  predicted,  that  the  first  sale  of  bonds  would 
fail  in  the  object  of  protecting  the  gold  reserve,  and  the  second  sale,  partly  to 
London,  necessitated  the  third  sale.  This  condition  was  largely  forced  by 
the  increased  National  Bank  note  circulation. 

The  men  who  forced  the  folly  of  1893  upon  the  country  have  suc- 
ceeded in  forcing  a  large  bond  issue  and  increasing  the  National  Bank  note 
circulation  at  the  expense  of  the  Government. 


35 

The  gold  monometallists  having-  forced  such  extreme 
measures,  the  silver  advocates,  as  a  natural  result,  resort  to 
the  opposite  extremes,  of  which  Mr.  Bland's  present  effort 
to  coin  the  seigniorage  is  an  illustration,  and  an  effort  and 
step  towards  forcing  the  silver  basis,  and  in  consequence  of 
the  action  of  Congress  at  the  special  session,  the  danger  of 
the  Government  being  forced  upon  the  silver  standard 
is  to-day  greater  than  at  any  time  since  1878.  With 
$1,200,000,000  of  paper  and  $100,000,000  of  gold,  the  finan- 
cial system,  and  through  this  every  industry,  is  entirely  in 
the  power  of  any  syndicate  of  speculators. 

In  the  present  depressed  state  of  the  markets  no  advan- 
tage could  be  gained  to  exercise  such  power,  but  after  a 
reasonable  advance  and  revival  of  trade,  which  must  follow 
even  without  prosperity,  such  a  syndicate  of  speculators,  by 
either  exporting  or  withdrawing  suddenly  $50,000,000  or 
$75,000,000  of  gold  from  the  Government,  would  create  a 
panic,  at  their  pleasure,  even  greater  than  that  through 
which  we  have  just  passed. 

No  section  of  our  country  favors  forcing  the  silver 
standard.  The  silver  mining  States  should  certainly 
represent  the  extreme  silver  view,  but  this  section  exhibited 
at  the  World's  Fair  a  silver  statue  of  "Justice  "  standing 
upon  a  gold  pedestal.  By  this  statue  the  extreme  West  ex- 
pressed to  the  nation  their  desire  that  the  use  of  silver 
should  be  based  upon  gold.  With  such  a  sentiment  exist- 
ing, it  should  not  be  difficult  to  carry  out  an  "  American 
Policy  "  and  settle  the  question  of  bimetallism  once  and  for- 
ever for  ourselves,  and  by  so  doing  set  an  example  for  other 
nations  to  follow. 

IN  THE  "EMPIRE    OF    FINANCE    AND    TRADE" 

MARCH  10,  1894. 

In  the  past,  during  the  period  of  the  free  coinage  of 
silver,  the  fluctuations  between  silver  and  gold  would  at 
times  practically  demonetize  silver,  at  times  gold,  and  cause 
an  instability  of  the  currency  which  the  fluctuations  in 
foreign  exchange  exceeding  the  cost  of  the  re-transfer  of 
the  metal  practically  demonstrated.  These  fluctuations  be- 
tween silver  of  a  fixed  ratio  and  gold  were  of  such  a  dis- 
turbing nature  that  the  free  coinage  of  silver  was  aban- 


86 

doned,  and  the  principles  of  the  "  Latin  Union  "  (interna- 
tional agreements)  were  pronounced  absolute  failures  and 
disturbers  of  commercial  relations. 

The  coinage  of  the  seigniorage  would  be  a  step  against 
placing  silver  upon  a  footing  approximating  that  of  gold, 
an  aid  to  gold,  and  the  free  coinage  of  silver  would  operate 
against  the  silver  industries,  for  our  country  would  be 
isolated  from  the  currencies  of  the  principal  commercial 
nations.  The  silver  basis  of  Mexico  guarantees  no  safety 
to  its  merchants. 

The  past  has  proved,  through  the  frequency  of  panics, 
that  a  fixed  ratio  for  silver,  causing  the  two  metals  to  act 
separately  in  place  of  one  aiding  the  other,  is  a  constant 
disturbing  element.  The  Luttgen  Monetary  System  by  its 
movable  ratio  brings  the  two  metals  into  harmony  and 
avoids  further  fluctuations  in  the  money  represented  by 
them. 

European  nations  will  not  consent  to  repeat  the  errors 
of  the  past  and  agree  to  an  international  fixed  ratio  for 
silver,  with  its  natural  results  of  undermining  their  present 
stable  currencies.  They  will  never  expose  their  industries 
to  such  a  suicidal  policy. 

The  silver  at  a  fixed  ratio,  which  the  old  system  has  left 
on  the  hands  of  several  nations,  is  a  constant  menace  to  the 
stability  of  their  currencies,  and  will  remain  a  danger  until 
the  ratio  of  this  system  is  adopted  by  them. 

The  practical  mind  will  recognize  that  in  the  practices 
of  the  past  no  solution  of  our  present  trouble  can  be 
found.  The  two  metals  must  be  brought  to  such  a  relation 
that  silver  will  aid  gold  under  all  circumstances,  and  thus 
practically  increase  the  quantity  of  gold  to  the  full  extent 
of  the  quantity  of  silver  now  existing  or  hereafter  pro- 
duced. 

The  solution  of  our  monetary  trouble  and  the  monetary 
trouble  of  the  world  lies  in  a  movable  ratio  as  provided  for 
in  the  Luttgen  Monetary  System. 

The  free  coinage  of  a  metal  indicates  that  it  shall  be 
placed  in  circulation  at  its  intrinsic  value.  This  is  the 
case  with  gold,  our  standard.  To  maintain  this  standard 
and  to  give  silver  practically  the  same  advantage  as  of  free 
coinage,  the  system  provides  that  silver  must  be  purchased 
by  the  Government  in  equal  daily  quantities  and  the  stand- 


87 

ard  based  upon  an  average  value  of  twelve  months.  Under 
this  system  the  fluctuations  which  under  the  free  coinage 
of  two  metals  were  so  annoying  to  commerce,  are  covered 
by  the  Government  without  loss,  and  will  never  be  felt  by 
commerce. 

Both  silver  and  gold  coin  being  for  convenience  repre- 
sented by  one  and  the  same  paper  money,  any  change  in 
the  ratio  of  silver  will  hardly  be  noticed  by  the  average 
citizen,  but  by  such  change  of  ratio  our  currency  will  be 
placed  upon  the  firmest  of  footings,  an  outflow  be  created 
for  the  Government  silver,  and  purchases  of  silver  for 
Government  account  consequently  continued  forever. 

IN  THE  "  EMPIRE  OF  FINANCE  AND  TRADE," 

APRIL  7,  1894. 

Under  the  laws  of  Nature,  there  is  nothing  dormant  or 
at  a  standstill ;  the  grains  of  gold  forming  our  money  unit 
are  constantly  fluctuating  in  value.  If  there  is  an  excep- 
tion to  this  law  of  Nature,  it  is  the  "  theorist  "  who  is  at  all 
times  "  impracticable."  It  is  not  the  "theorist,"  but  the 
thoughtful,  practical  mind  that  is  needed  to  find  the  "  way 
for  the  adjustment  of  our  monetary  affairs  in  a  compre- 
hensive and  conservative  manner,  to  afford  to  silver  its 
proper  place  in  our  currency,"  by  a  method  that  will  pre- 
vent loss  to  both  the  Government  and  to  the  people,  and 
increase  confidence  at  home  and  abroad  in  the  currency  now 
existing  ;  all  of  which  this  system  will  accomplish. 

The  present  condition  is  the  gold  standard  with  an  in- 
sufficient supply  of  gold  and  "  practical  difficulties  sur- 
rounding the  replenishment  of  our  gold."  In  consequence 
of  this,  we  are  threatened  with  the  silver  standard,  and  all 
the  evils  accompanying  such  a  change.  Under  these  cir- 
cumstances, the  fact  that  gold  has  appreciated,  and  to  what 
extent,  is  entirely  immaterial,  and  may  be  left  to  the 
"  theorist  "  for  discussion.  We  must  supply  an  equivalent 
to  gold  to  protect  our  monetary  system  from  violent 
changes.  The  situation  compels  us  to  place  silver  upon 
such  a  basis  that  it  will  answer  the  purpose  of  gold,  and  by 
doing  so  we  will  give  to  silver  its  proper  place,  a  place  it 
has  heretofore  never  held.  Silver  upon  such  a  basis  will 
bring  the  value    of  gold    down  to   its   former   purchasing 


88 

power  and  lift  the  gold  standard  permanently  out  of  its 
present  embarrassment,  and  it  will  enable  us  to  discharge 
our  obligations  on  the  gold  standard,  upon  which  they  were 
based,  by  both  gold  and  silver,  and  avoid  the  repudiation  of 
a  part  of  our  debts  which  a  silver  standard  would  imply. 

In  our  Government  Treasury  is  a  large  stock  of  silver, 
not  serving  as  money,  but  as  a  "  token,''  for  which  purpose 
paper  would  answer  as  well.  This  silver  is  serving  no  pur- 
pose whatever,  but  is  carried  at  a  heavy  loss  and  held  at  a 
fictitious  value.  It  should  be  put  upon  a  basis  to  serve  as  a 
money  and  to  make  our  currency  safe  and  stable.  Every 
additional  silver  dollar  coined  at  a  ratio  of  16  to  I,  while 
silver  bullion  does  not  approximate  this  value,  is  a  wrong 
against  the  silver  interests  and  against  the  public.  By  this 
false  ratio  the  Government  stops  the  demand  for  silver  and 
injuries  our  mining  and  dependent  interests.  The  Govern- 
ment has  no  more  right  to  do  this  than  to  prohibit  the  use 
of  rye  for  flour.  We  need  the  product  of  our  mine  as  well 
as  the  product  of  the  soil ;  both  are  essential  to  our  pros- 
perity. 

"  The  dollar  of  our  fathers,"  of  which  we  hear  so  much, 
was  practically  on  a  par  value  with  gold  and  with  the  silver 
bullion.  Let  us  be  equally  honest  and  coin  a  silver  dollar 
at  its  bullion  value  and  equal  to  the  gold  dollar.  Upon  this 
basis  only  can  our  mining  interests  be  benefited  and  con- 
fidence restored. 

The  free  coinage  of  silver  would  have  the  disadvantages 
of  the  silver  standard,  and  the  coinage  would  be  restricted 
by  the  capacity  of  the  mints,  a  capacity  which  does  not 
vary  from  day  to  day.  This  system  offers  to  silver  the  same 
coining  advantages  upon  the  gold  standard,  and  the  power 
of  settling  balances  between  nations. 

It  is  gratifying  to  notice  the  change  in  our  New  York 
bankers  and  business  men.  Last  year  they  favored  the 
issue  of  fiat  money  by  opposing  the  silver  purchase  and  by 
favoring  an  increase  of  National  Bank  circulation  ;  to-day 
they  recognize  their  error  and  the  danger  of  increasing  the 
circulation  with  silver  upon  a  false  ratio  and  without  an 
adequate  gold  reserve  by  opposing  the  Bland  Bill.  Oppo- 
sition to  this  bill  will  admit  of  correction  of  ratio. 

The  National  Bank  circulation  was  increased  upwards  of 
thirty  million  dollars.     Had  the  purchases  of  silver  con- 


8g 

tinued,  the  currency  would  have  been  increased  but  one-half 
of  this  amount,  and  based  upon  silver  which,  at  a  ratio  ap- 
proximating cost,  would  have  been  equivalent  to  gold. 

The  repeal  of  the  silver  purchase  law  is  indefensible,  and 
prosperity  will  not  return  until  such  purchases  are  resumed 
and  the  ratio  corrected.  The  latter  must  be  done  by  inde- 
pendent action,  for  "  International  Bimetallism  '"  is  a  folly 
and  advocated  only  by  the  impracticable,  the  insincere  or 
the  misinformed. 

The  stability  of  our  gold  unit  will  be  greater  when 
nations  use  silver  based  upon  gold  than  at  present  with 
some  nations  on  the  gold  and  others  upon  the  silver 
standard. 

To  issue  bonds  for  the  purpose  of  maintaining  a  gold 
reserve  is  a  hazardous  undertaking,  with  the  only  sure  result 
of  increasing  the  burden  of  taxation.  By  placing  silver 
upon  the  proper  ratio,  gold  will  flow  into  the  Treasury 
without  cost  to  the  nation. 

There  is  no  reason  why  the  Government  should  receive 
any  gain  or  seigniorage  from  silver  any  more  than  from 
gold.  Such  seigniorage  places  the  metal  upon  a  false  basis 
and  at  a  disadvantage  with  gold  ;  nor  must  the  Govern- 
ment suffer  loss  from  the  silver  now  on  hand  nor  from 
future  purchases. 

To  place  our  financial  condition  beyond  all  doubt  the 
system  requires : 

First.— The  calling  in  of  all  gold  certificates  (storage 
receipts)  and  authorizing  a  legal  tender  note  redeemable  in 
gold  or  in  standard  silver  at  the  option  of  the  holder,  in 
exchange  for  all  gold  deposited  with  the  Government.  By 
storing  this  gold  the  Government  is  undermining  its  own 
gold  standard,  for  the  gold  is  thereby  prevented  from  act- 
ing as  a  currency  reserve  and  from  contributing  to  give 
confidence  in  such  currency. 

There  is  no  more  reason  or  justice  in  storing  gold  and 
issuing  storage  certificates  therefor  than  there  would  be 
in  storing  wheat,  cotton,  etc.,  without  expense  to  owners. 
In  fact,  if  the  Government  were  to  store,  free  of  charge, 
the  produce  for  the  farmer  and  the  merchandise  for  the 
merchant,  the  nation  would  suffer  less  loss  than  in  storing 
this  gold  and  undermining  thereby  the  nation's  monetary 
system. 


90 

Second. — That  all  silver,  coined  and  uncoined,  purchased 
since  1878  be  restored  to  its  original  cost.  This  would  be 
simply  a  question  of  accounts  or  matter  of  form. 

Third. — That  such  silver  shall  be  classified  as  to  cost  for 
every  even  unit,  ratio  price  ;  as,  for  instance,  silver  pur- 
chased at  from  82.74  to  86.19  cents,  to  be  all  charged  at 
86.19  cents,  and  the  difference  or  seigniorage  to  be  credited 
to  a  special  account ;  a  Silver  Safety  Fund,  etc.,  the  object 
of  which  is  to  cover  any  depreciation  in  silver  in  case  of  an 
extraordinary  demand  upon  the  Government. 

Fourth. — That  the  cost  of  the  lowest  priced  silver  on 
hand  shall  determine  the  first  ratio  under  this  system  ;  if 
this  ratio  price  is  above  the  then  market  price,  the  first 
ratio  under  this  system  would  be  27  to  1  to  the  extent 
of  the  silver  purchased  from  July  to  October,  1893,  below 
76.12. 

Fifth. — That  the  silver  purchases  shall  be  at  once 
resumed  in  uniform  daily  quantities  of  180,000  ounces,  or  at 
the  rate  of  3  ounces  per  day  for  each  1,000  inhabitants. 

Sixth.— That  the  average  cost  of  these  purchases  for  a 
period  of  twelve  months  determines  the  future  standards, 
the  even  unit  ratio  price  next  above  this  average  forming 
the  new  ratio,  always  provided  this  is  above  the  then  cur- 
rent market  price. 

Seventh. — No  silver  to  be  purchased  at  exceeding  the 
standard  value  then  existing,  and  when  less  than  50  per  cent, 
of  the  quota  has  been  purchased  within  twelve  months,  the 
standard  to  be  advanced.  Should  the  principal  nations 
buy  but  50  per  cent,  of  the  quota  of  1  ounce  per  day  for 
each  1,000  inhabitants,  all  the  silver  produced  would  be 
turned  into  money,  and  silver  would  be  likely  to  advance 
even  beyond  the  ratio  of  16  to  1.  This  is  the  true  solution 
of  the  money  question  of  the  world. 

Eighth. — Silver  would  be  demanded  from  the  Govern- 
ment when  the  market  price  exceeds  the  standard  value,  and 
would  then  be  exported  in  preference  to  gold  ;  yet  such 
fluctuations  would  in  no  way  affect  our  exchanges.  An 
outflow  for  silver,  without  loss  to  the  Government,  would 
be  created. 

Ninth. — No  United  States  silver  coin  to  be  imported 
except  at  its  bullion  value,  and,  when  so  imported,  to  be  put 
into  bars  by  the  Government  at  owner's  cost.     All  silver 


9i 

coins  exported  to  be  in  final  settlement,  being  only  exported 
when  equal  or  above  bullion  value. 

Tenth. — All  silver  coins  of  whatever  ratio  to  be  full 
legal  tender,  the  Government  being  at  all  times  ready  to 
exchange  all  for  existing  standard.  Subsidiary  coins  to  be 
coined  of  one  ratio  higher  for  silver  than  the  standard 
then  existing. 

Eleventh.  —  To  create  the  desired  elasticity  of  our  cur- 
rency a  coupon  Treasury  bond  bearing  2.555  per  cent, 
interest,  to  be  authorized  to  the  extent  of  the  outstanding 
uncovered  "  greenbacks  "  obtainable  for  any  of  the  out- 
standing currency  on  the  first  of  any  month,  and  exchange- 
able back  into  legal  tender  currency  at  the  pleasure  of  the 
holder  on  any  day,  provided  the  gold  reserve  is  not  less 
than  20  per  cent. 

The  gold  reserve  under  this  system  may  be  reasonably 
estimated  to  attain  to  upwards  of  $400,000,000  at  times,  for 
the  banks  will  find  it  more  profitable  to  hold  silver  in  their 
vaults  than  gold. 


IN  THE  "EMPIRE   OF  FINANCE  AND   TRADE," 

APRIL    14,  1894. 

Senator  Sherman  stated  in  the  Senate  a  few  days  ago 
that  there  could  be  no  opposition  among  any  portion  of 
the  people  to  the  use  of  silver  when  it  would  not  demone- 
tize gold.  This  is  right,  and  the  movement  to  give  to  silver 
its  proper  place  must  be  inaugurated  and  guided  by  New 
York  City,  the  financial  center,  and  must  not  be  left  to  the 
vagaries  of  other  sections. 

Since  my  last  communication  two  propositions  have 
been  advanced  ;  one  tc  coin  42  millions  of  silver  now  in  the 
Treasury,  and  the  issue  of  bonds,  the  other  to  coin  the  Mexi- 
can dollar.  Both  propositions  are  impracticable  and  without 
utility  and  may  be  classed  among  the  so-called  "  make- 
shifts." Among  these  may  also  be  classed  the  suggestion 
from  Holland  to  issue  silver  certificates,  for  we  do  not 
want  two  moneys,  one  based  on  gold  and  one  based  on 
silver,  but  we  do  want  one  money  based  on  gold  and  silver. 

No  further  silver  should  now  be  coined  at  the  ratio  of 
16  to  1,  nor  should  any  further  bonds  be  issued  to  main- 


92 

tain  a  satisfactory  gold  reserve.  Such  reserve  must  be 
kept  up  by  placing  silver  upon  its  proper  basis. 

If  it  is  desirable  to  set  our  idle  mints  in  motion  it 
would  be  better  to  coin  at  once  the  silver  purchased  at  be- 
low 76.12  into  dollars  of  the  ratio  of  27  to  1,  and  into  frac- 
tional coin  at  the  ratio  of  26  to  1  ;  coins  of  all  denominations 
to  be  of  the  same  circumference  as  heretofore,  the  extra 
weight  being  represented  by  increased  thickness. 

The  danger  of  illicit  coining  of  our  fractional  money 
is  even  greater  than  in  the  case  of  our  dollar,  and  this 
applies  to  the  silver  coins  of  all  nations  on  the  gold  stan- 
dard. 

By  coining  the  above  dollars  at  27  to  1,  the  Government 
would  take  the  initiative  towards  a  sound  currency,  and  this 
act  alone  would  not  only  enhance  the  price  of  silver  ma- 
terially, but  would  forever  remove  the  fallacy  and  danger 
of  coining  an  inferior  dollar  and  the  question  of  seigni- 
orage. 

IN  THE  "EMPIRE  OF  FINANCE  AND  TRADE," 

APRIL  28,  1894. 

As  a  practical  step  for  the  relief  of  the  financial  crisis, 
which  has  not  yet  passed,  but  is  threatening  the  world  with 
disaster,  compared  to  which  the  panic  of  last  year  is  only 
a  ripple  or  warning,  this  greater  panic  is  likely  to  develop 
itself  at  any  time  within  the  next  two  or  three  years,  unless 
a  proper  basis  for  the  money  of  the  world  is  obtained,  and 
for  the  further  purpose  of  directing  the  attention  of  the  pub- 
lic to  measures  that  will  produce  a  sound  money,  not  for  five 
years,  but  for  always,  I  advocate  bringing  before  Congress 
a  bill,  first,  to  authorize  the  coinage  of  all  silver  purchased 
below  the  price  of  76.62  per  ounce  into  national  dollars  of 
the  ratio  of  27  to  1,  and  that  when  such  coinage  is  exhausted 
to  coin  successively  the  silver  at  26  to  1,  25  to  1,  etc.,  to 
the  extent  of  the  amounts  purchased  within  these  figures, 
provided  that  no  silver  is  coined,  at  a  loss  to  the  Govern- 
ment. 

The  small  seigniorage  between  these  ratios  and  cost  to  be 
carried  to  a  "  silver  safety  redemption  fund  "  (I  would  sug- 
gest this  new  dollar  to  be  termed  an  International  Dollar). 

2d.  That  it  shall  be  the  policy  of  the  Government  to  pay 


93 

out  neither  gold  nor  silver  coin,  except  on  demand,  but  a 
legal  tender  note  representing  either  at  option  of  holder. 

The  coinage  of  silver  at  the  even  unit  ratio  next  above  cost 
would  be  a  step  in  the  right  direction,  and  would  establish 
a  silver  dollar  that  may  soon,  due  to  fluctuations  in  silver, 
be  worth  par  and  equal  gold,  and  thus  strengthen  the  gold 
reserve. 

There  can  be  no  objection  to  such  coinage  on  the  part 
of  either  the  gold  monometallists,  or  of  the  friends  of  the 
16  to  i  ratio  for  silver.  The  only  objection  could  come 
from  those  who  wish  to  burden  the  nation  with  an  increas- 
ing issue  of  bonds,  for  it  would  strengthen  the  gold  stan- 
dard and  it  would  create  a  demand  for  silver,  which  demand 
alone  can  make  the  ratio  of  16  to  i  one  of  the  practical 
probabilities  of  the  future,  and  would  make  a  further  bond 
issue  for  reserve  unnecessary. 

Those  who  were  justly  opposed  to  the  coinage  of  the 
seigniorage  should  certainly  favor  putting  into  the  silver 
dollar  all  of  the  silver  purchased  for  that  dollar.  With  this  sys- 
tem the  dangers  and  restrictions  of  an  international  agreement 
can  be  avoided  and  an  independent  American  policy  adopted, 
not  only  with  absolute  safety  to  the  gold  standard,  but 
with  a  power  exercised  through  the  natural  laws  of  trade 
that  will  force  other  nations  to  adopt  the  same  or  endanger 
their  gold  standards.  This  power  will  be  greater  over  Great 
Britain  than  that  which  Senator  Lodge  proposes  through 
tariff  discriminations  ;  but  the  action  of  Great  Britain  would 
then  be  entirely  indifferent  to  us  as  far  as  the  safety  of  our 
monetary  system  would  be  involved,  but  would  further  en- 
hance the  value  of  silver.  Nation  after  nation  would  vol- 
untarily adopt  our  system. 

The  fallacy  and  prejudice  of  a  fixed  ratio  for  silver 
under  the  gold  standard  is  the  cause  of  the  present  financial 
disturbance  throughout  the  world.  This  question  can 
never  be  settled  by  a  fixed  ratio,  whether  established  by 
one  or  any  number  of  nations. 

On  every  hand  we  see  daily  the  evidence  that  this  im- 
portant question  underlying  or  influencing  every  under- 
taking is  not  receiving  the  careful  consideration  it  should 
receive.  To  better  illustrate  the  effect  of  the  Government 
policy  of  holding  silver  at  the  ratio  of  16  to  i,  let  us  sup- 
pose the  Government  were  to  treat  corn  as  silver  ;  suppos- 


94 

ing  corn  to  be  worth  two-thirds  the  price  of  wheat,  or  44 
cents,  and  wheat  66  cents  per  bushel.  If  the  Government 
were  to  forbid  by  law  the  sale  and  purchase  of  corn  except 
at  88  cents  per  bushel,  or  one-third  higher  than  wheat, 
except  among  farmers,  every  farmer  would  protest,  for  his 
corn  would  find  no  market,  and  the  price  would  further 
decline.  Consumers  would  use  wheat  in  place  of  corn.  It 
is  strange  that  the  mine  owner,  who  is  the  producer  of 
silver,  as  the  farmer  is  of  corn,  does  not  recognize  that  the 
Government  is  injuring  him  with  this  fictitious  valuation  of 
16  to  1.  It  is  not  practicable  for  settling  balances  abroad, 
and  gold  is  used  instead. 

Silver  coined  at  cost  would  not  only  be  in  demand 
according  to  fluctuations  for  export,  but  would  be  used  in 
the  industrial  arts  the  same  as  gold  coin. 

The  low  price  of  wheat  is  caused  by  the  prejudice  in 
favor  of  silver  yet  existing  in  the  silver  wheat- producing 
countries.  Such  prejudice  in  favor  of  silver  will  not  con- 
tinue to  exist  long,  and  is  a  very  unsubstantial  basis  to 
build  upon.  In  a  very  few  years  the  silver  of  the  world 
will  move  together. 

IN   THE  "EMPIRE   OF   FINANCE   AND  TRADE," 

MAY  12,  1894. 

The  International  Bimetallic  Conferences,  of  which 
another  was  recently  held  in  London,  are  undoubtedly 
pleasant,  social  gatherings,  but  the  idea  of  solving  the  silver 
problem  through  international  agreement  is  justly  ridiculed 
by  the  press  of  London.  It  is  about  time  that  all  such 
schemes  should  be  laughed  down.  The  gold  standard  is 
not  fixed  by  international  agreement ;  why  should  the  em- 
ployment of  silver  be  thus  restricted? 

Men  of  position,  with  no  knowledge  or  opinion  in  mone- 
tary matters,  have  for  some  time  sought  refuge  in  the  plati- 
tude of  "  an  international  agreement,"  yet  not  one  has 
ever  formulated  such  an  agreement,  or  illustrated  the  prac- 
tical working  of  the  same.  The  indefinite  expression  of 
"  an  enlargement  of  the  principles  of  the  Latin  Union," 
has  been  ventured  by  some,  but  this  same  Latin  Union  has 
proved  an  absolute  failure,  becoming  a  burden  too  heavy 
for  some  of  its  members  to  carry. 


95 

The  error  of  the  past  has  been  to  antagonize  silver  and 
gold  by  establishing  arbitrary  ratios.  Under  such  a  condi- 
tion bimetallism  cannot  exist,  and  the  result  has  been  that 
bimetallism  does  not  exist  to-day  in  any  part  of  the  world. 
Using  silver  as  a  token  or  subsidiary  metal,  as  in  the  United 
States,  France,  Germany,  etc.,  etc.,  is  not  bimetallism.  To 
obtain  bimetallism  it  is  necessary  that  silver  as  money  shall 
be  so  adjusted  to  the  gold  standard  that  its  intrinsic  value 
will  permit  ultimate  settlements  thereby  between  nations. 
Silver  must  be  placed  in  a  position  to  be  of  full  debt-paying 
power. 

The  multiplicity  of  complicated  and  bewildering  schemes 
advanced  by  financiers  illustrates  the  importance  of  the 
work  in  which  I  have  been  engaged  for  years,  and  of 
which  this  system,  perfect  in  every  respect,  is  the  result. 

It  was  years  before  the  value  and  benefits  of  Columbus' 
discovery  were  recognized.  This  discovery  has  benefited 
all  mankind,  yet,  after  Columbus  discovered  America  there 
was  no  other  America  to  discover;  so  it  is  with  this 
system.  The  problem  will  do  more  for  mankind  than  the 
discovery  of  America  has  done. 

A  movable  ratio  is  the  principal  feature  of  this  system. 
This  movable  standard  need  not  be  represented  by  the 
even  unit  ratios,  but  may  be  based  upon  the  multiple  of 
any  weight,  as  of  24  grains,  viz.,  480  grains,  504  grains,  etc., 
or  may  be  based  upon  a  value  standard  of  5  per  cent 
variations,  etc.,  but  the  even  unit  ratio  is  the  most  practicable. 
Other  nations  may  adopt  a  change  of  standard  at  every 
1^  ratios  or  two  unit  ratios  apart,  as  their  own  needs  may 
dictate;  as,  for  instance,  should  gold  reserve  exceed  40  per 
cent.,  a  difference  of  two  unit  ratios  would  increase  the 
silver  reserve.  The  mechanical  execution  of  this  system 
would  vary  according  to  the  needs  of  the  respective 
countries. 

All  silver  coined  in  accordance  with  this  system  should 
be  preferably  .925  fine,  or  of  such  standard  most  suitable  for 
use  in  the  mechanical  arts,  to  encourage  a  new  demand  lor 
silver  coins.  Every  possible  outlet  and  use  for  silver  should 
be  created  the  same  as  for  gold ;  no  more  subsidiary 
coinage. 

Under  such  a  system  the  nervous  transfer  of  specie  from 
nation  to  nation  on  the  slightest  variations  of  exchange  will 


96 

be  much  lessened,  and  gold  will  return  to  its  former  pur- 
chasing value.  All  of  the  world's  surplus,  gold  and  silver, 
will  be  permanently  needed  as  money,  and  all  nations  will 
be  upon  one  standard. 

This  system   requires    no  concerted  action,  the  nation 
adopting  it  first  will  have  an  advantage  over  its  followers. 


United  States  Senate,  May  21,  1894. 

F.  W.  Luttgen,  Esq., 

New  York  City. 

Dear  Sir, — You  are  entitled  to  commendation  and 
sympathy  in  your  efforts  to  solve  the  existing  currency 
question. 

Yours  respectfully, 

W.  E.  Chandler. 


IN  THE  "  EMPIRE  OF  FINANCE  AND  TRADE," 

MAY  26,  1894. 

In  fighting  the  battle  for  sound  money,  it  is  well  to 
locate  the  enemy. 

Antagonism  to  a  stable  currency  in  our  western  States 
was  considered  to  be  centered  in  Mr.  Bland  of  Missouri,  as 
the  champion  of  the  arbitrary  ratio  of  16  to  1  ;  but  Mr. 
Bland  has  recently  approved  of  the  money  platform  of  the 
Missouri  Democratic  State  Convention  and  thereby  aban- 
doned his  fight  for  this  arbitrary  and  at  present  impracticable 
ratio,  and  Mr.  Bland  may,  therefore,  now  be  counted  as  a 
friend  of  sound  money. 

It  is  now  time  that  those  pretended  friends  of  bimetallism 
who  are  arguing  that  silver  in  India,  China,  Mexico,  or 
where  not,  has  not  varied  in  purchasing  power,  should 
change  their  course  of  argument,  for  such  argument  only 
excites  derision  and  hurts  the  cause  of  bimetallism  and 
sound  money. 

To  prove  the  necessity  of  employing  all  available  gold 
and  silver  as  money,  it  is  not  necessary  to  resort  to  misrep- 
resentations or  theories. 


97 

The  greatest  enemy  of  sound  money  is  the  "gold  mono- 
metallist."  His  theory  of  a  sufficiency  of  gold  has  pro- 
duced the  present  panic,  as  well  as  several  previous  panics, 
and,  unless  he  is  overcome,  a  more  destructive  panic  will 
follow  the  first  revival  of  business. 

The  Missouri  Democratic  State  Platform,  which  Mr. 
Bland  approved  of,  provides  for  free  bimetallic  coinage  of 
both  gold  and  silver  at  such  ratio  as  will  maintain  the  two 
metals  in  circulation. 

If  any  one  believes  that  the  two  metals  can  be  main- 
tained in  circulation  by  any  fixed  arbitrary  ratio  let  him 
study  the  financial  history  of  the  past  ioo  years,  and  he 
will  be  undeceived.  The  movable  ratio  under  this  system 
can  alone  accomplish  this,  as  well  as  readjust  the  rise  in 
gold  and  fall  in  silver,  that  the  rights  of  both  creditor  and 
debtor  may  be  protected. 

By  the  word  "  free  coinage  "  unlimited  coinage  cannot 
be  meant,  for  the  capacity  of  our  mints  would  practically 
limit  the  coinage  to  an  equal  daily  amount,  the  same  as  pro- 
vided by  this  system  ;  but  this  system  has  the  advantage  in 
giving  the  owner  of  silver  the  market  value  the  same  as  in 
the  case  of  gold  in  legal  money  on  presentation  of  bullion. 
The  tenacity  with  which  the  friends  of  silver  held  fast  to 
the  ratio  of  16  to  i  made  the  repeal  of  the  Sherman  pur- 
chasing act  a  necessity,  which  otherwise  could  have  been 
continued,  and  with  the  change  of  ratio  in  accordance  with 
this  system  would  have  restored  confidence  at  once,  re- 
opened our  mines,  and  set  all  industries  in  motion.  Mr. 
Bland  and  his  friends  no  longer  holding  to  this  arbitrary 
ratio,  silver  purchases  should  at  once  be  renewed  to  the  ex- 
tent of  180,000  ounces  daily  as  this  system  provides,  thereby 
strengthening  the  gold  standard  and  removing  the  neces- 
sity for  a  further  bond  issue  by  the  Government. 

The  repeal  of  the  silver  purchase  law  has  created  much 
hardship,  and  for  this  both  parties  are  at  fault.  The  simplest 
legislation  only  is  necessary  to  give  the  country  prosperity. 
I  would  also  suggest  an  amendment  to  the  tariff  bill  now  in 
Congress  to  the  effect  that  all  United  States  silver  coin 
shall  be  imported  as  "  bullion,"  subject  to  a  charge  for  such 
conversion. 


98 

IN    "EMPIRE   OF    FINANCE  AND  TRADE,''    NO- 
VEMBER 24,  1894. 

The  settlement  of  our  tariff  removed  another  phantom 
cause  for  our  late  panic  and  present  stagnation  in  business, 
but  the  general  public  was  not  deceived,  and  declared  itself 
against  the  party  who  failed  to  fulfill  its  promise  of  1892  to 
"  use  both  gold  and  silver  as  standard  money." 

It  should  be  apparent  to  any  observing  mind  that  our 
panic  of  1893,  as  well  as  the  depressions  of  trade  in  other 
parts  of  the  world,  were  produced  by  a  doubtful  monetary 
system,  a  false  relation  between  silver  and  gold.  For  a 
period  prior  to  1892  our  gold  reserve  was  at  times  seriously 
threatened  by  the  exports  of  gold,  but  a  panic  was  then 
averted  by  a  blind  hopefulness  on  the  part  of  the  public 
that  the  Brussels  Monetary  Conference  would  lead  to  some 
solution.  What  this  solution  would  be  the  public  had  no 
thought,  nor  even  the  delegates  who  represented  us. 

The  failure  of  the  Brussels  Conference  caused  confi- 
dence to  be  shaken,  which  was  practically  the  origin  of  our 
panic.  As  blind  as  was  the  confidence  in  the  power  of  the 
Conference  before  its  failure,  so  equally  blind  was  the  cry 
that  followed  "  that  our  silver  purchases  were  the  cause  of 
our  trouble."  This  was  an  extremely  superficial  idea,  and 
did  not  represent  one-quarter  of  the  truth,  for  it  was  not 
the  purchase  of  silver,  but  the  ratio,  which  was  at  fault,  and 
the  purchases  only  as  far  as  associated  with  a  fixed  ratio. 

Time  has  dispelled  these  phantoms,  and  our  merchants 
and  bankers  may  finally  realize  the  truth.  The  world  has 
arrived  at  a  period  of  progress  where  a  fixed  ratio  between 
the  two  necessary  money  metals  is  no  longer  practicable. 

It  was  in  February,  1891,  that  the  "  Luttgen  Monetary 
System "  was  first  published ;  since  then  much  has  been 
said  and  published  on  this  question — my  great  work  has  in- 
duced many  imitations  with  no  knowledge  of  finance,  and 
its  subtle  requirements  to  force  erratic  ideas  upon  the 
public.  There  is  but  one  solution  of  the  great  monetary 
problem  that  has  been  for  centuries  before  the  world,  and 
this  is  presented  in  "the  Luttgen  Monetary  System." 

This  system  is  not  the  creation  of  an  individual  opinion 
or  judgment,  but  is  the  result  of  years  of  research,  and  is 
rather  the  discovery  of  one   mind  in  trying  to  harmonize 


99 

the  antagonistic  interests  and  the  present  situation  with  a 
stable  system  without  loss  to  the  Government  or  disturbing 
the  form  of  currency  to  which  we  are  accustomed. 

Every  material  progress  that  has  been  made  in  what- 
ever branch  of  science,  art  or  reform  has  been  the  work 
of  a  single  mind.  Our  powers  of  thought  are  strongest  in 
solitude. 

The  system  offers  the  solution  to  every  monetary  diffi- 
culty. Financiers  or  men  of  experience  will  find  endless 
pleasure  in  following  its  operations. 

The  system  as  a  whole  is  complete  and  perfect.  It  offers 
an  absolutely  stable  currency  in  placing  the  gold  standard 
upon  such  a  solid  basis  as  it  has  never  before  attained,  and 
will  guarantee  the  continued  use  of  silver  as  standard 
money  in  connection  with  gold  for  the  first  time  in  the  his- 
tory of  finance. 

It  will  give  us  also  a  safe  elastic  currency.  One  of  the 
features  of  this  system  was  proposed  by  Representative 
Johnson  of  Ohio  during  the  special  session  of  Congress  in 
1893,  but  the  system  should  not  be  adopted  in  parts,  but 
as  a  whole.  It  is  all  the  parts  that  produce  the  perfect 
whole. 

What  is  called  the  Baltimore  Plan,  a  superstructure 
without  adequate  foundation,  does  not  meet  our  present 
necessity,  for  with  the  present  stagnation  and  impaired  con- 
fidence we  need  a  better  metal  reserve  rather  than  an  in- 
creased volume  of  currency,  and  this  need  was  not  even 
touched  at  Baltimore. 

Our  associated  banks  and  our  Chamber  of  Commerce 
should  acquaint  themselves  thoroughly  with  this  system, 
that  its  introduction  may  not  be  unnecessarily  delayed.  That 
this  system  will  finally  prevail,  notwithstanding  any  obstacle, 
there  can  be  no  doubt. 

This  question  requires  thought  and  study,  and  has  un- 
doubtedly received  more  time  and  attention  from  me  than 
it  has  ever  received  before. 

Upon  the  stability  of  the  monetary  system  the  prosperity 
of  a  people  depends.  A  fixed  ratio  belongs  to  the  period 
of  stage  coaches  or  tallow  candles,  not  to  the  present  period 
of  steam  and  electricity. 

The  associated  banks  of  New  York  are  to-day  erecting 
a  clearing  house,  a  house  which  is  expected  to  stand  for 


IOO 

centuries,  but  I  present  here  single  handed  a  structure  which 
will  stand  thousands  of  years. 

Japan  has  surprised  the  world  in  substantiating  her  right 
to  be  classed  among  the  first  military  and  naval  powers. 
We  must  admit  the  possibility  of  being  compelled  to  recog- 
nize her  soon  as  a  commercial  and  financial  power.  Such 
progress  and  acquisition  to  the  commercial  world  should 
satisfy  all  practical  men  of  the  folly  of  international  mone- 
tary conferences. 

The  bond  issues  to  replenish  the  gold  reserves  are  very 
unfortunate.  The  discriminations  between  existing  moneys- 
should  not  be  made  by  the  Government.  The  only  result 
derived  from  these  bond  issues  will  be  an  annual  increase 
in  the  cost  for  interest.  The  fiscal  and  monetary  systems 
of  our  Government  should  be  separated.  The  tariff  and 
taxes  on  spirits  and  tobacco,  and  not  bonds,  should  cover  the 
fiscal  requirements. 

During  the  panic  of  1893  hundreds  of  firms  and  corpo- 
rations had  to  appeal  for  assistance  to  syndicates  of 
bankers  and  capitalists,  and  many  of  them  are  yet  of 
doubtful  outcome  as  to  surplus  or  profit.  These  pending 
transactions  alone  should  warrant  attention  being  given  to 
this  subject. 

This  system  will  replenish  our  gold  reserve  without  the 
issue  of  bonds,  and  within  sixty  days  after  the  adoption  of 
this  system  the  country  would  feel  the  resulting  prosperity 
in  every  branch  of  industry. 

The  benefits  that  this  system  will  bestow  upon  the  world 
are  so  great  that  it  would  take  volumes  to  describe  them. 

IN    "THE    EMPIRE    OF    FINANCE,"   JANUARY 

14,  1895. 


Sound  Money. 


A    SHORT   SYNOPSIS    OF   THE   LUTTGEN    MONETARY   SYSTEM. 

(Copyright  1891.) 

Radical  changes  are  inconsistent  with  sound  money. 
The  money  to  which  we  are  accustomed  has  therefore  the 
first  claim  for  consideration  for  future  use.  Why  not,  then, 
strengthen  the  foundations   of  our  existing  currency,  and 


ior 

not  effect  alterations  offering  but  temporary  and  doubtful 
relief  ? 

There  is  no  feature  in  our  present  currency  which  can- 
not be  made  absolutely  sound  without  expense  to  our  Gov- 
ernment or  people  by  the  introduction  of  the  Luttgen 
Monetary  System.  This  system  treats  of  the  proper  rela- 
tions between  the  two  metals,  silver  and  gold,  but  creates 
also  a  basis  for  an  elastic  sound  subsidiary  or  supplement- 
ary currency. 

The  principles  of  the  system  are  : 

ist.  The  absolute  gold  standard,  and  this  defended  by 
the  proper  use  of  silver. 

2d.  The  continued  employment  of  silver  upon  its  in- 
trinsic or  bullion  value  or  gold  standard,  and  thereby  re- 
moving the  existing  antagonism  between  the  two  metals — 
therefore  the  coinage  of  both  metals  at  cost. 

3d.  Automatic,  opposed  to  all  discretionary  powers, 
whether  vested  in  the  Secretary  of  the  Treasury  Commis- 
sion or  otherwise.  Who  would  be  willing  to  allow  the 
Secretary  to  change  the  weight  of  the  gold  dollar  at  dis- 
cretion ?  Yet  any  discretionary  power  relating  to  our  cur- 
rency is  in  effect  equivalent  to  this.  Discretionary  powers 
and  elasticity  relating  to  currency  describe  antagonistic 
conditions. 

Our  existing  material  out  of  which  to  create  a  perma- 
nent sound  money  is  approximately  as  follows. 

Government  Currency  Obligations. 

$400,000,000  in  silver  certificates  secured  by  silver  coin  and 
in  silver. 

150,000,000  in  Treasury  notes  secured  by  silver  at  cost. 

350,000,000   in    legal    tender   notes    theoretically    with    a 
$100,000,000  gold  reserve,  but  this  reserve  is 
constantly  endangered  by  deficits  in  Govern- 
ment revenue. 
$900,000,000  total. 

750,000,000  in  outstanding  Government  bonds. 

400,000,000  in  gold  in  circulation  or  serving  as  money. 

200,000,000  in  National  Bank  notes  secured  by  Govern- 
ment bonds,  the  above  representing  a  total 
circulation  of  about  $1,500,000,000. 


102 

This  position  demands: 

I.— Protection  for  the  reserves  of  the  currency  system  by 
authorizing  the  Treasury  to  borrow  to  meet  any  deficit  in 
revenue.  A  proper  currency  system  when  not  raided  re- 
quires no  new  bond  issues. 

II. — The  strengthening  and  defending  of  the  gold  re- 
serve by  placing  silver  upon  its  proper  relation. 

III.— An  increasing  and  elastic  sound  currency  obedient 
to  the  demands  of  commerce. 

Preliminary  Laws. 

First. — For  the  separation  of  the  Government  fiscal  sys- 
tem from  the  monetary  system,  and  for  the  deposit  in  banks 
of  any  Government  fiscal  balances  exceeding  2\  per  cent, 
of  the  Government  monetary  issues,  to  avoid  arbitrary  con- 
tractions. 

Second. — For  cancellation  of  gold  certificates  either  by 
payment  or  exchange  for  a  new  legal  tender  note  payable 
in  gold  or  silver  at  pleasure  of  holder. 

Third. — For  a  uniform  legal  tender  note  payable  in  gold 
or  silver  at  pleasure  of  holder  to  be  issued  for  deposits  of 
gold. 

Fourth.— For  the  restoration  of  all  Government  silver 
and  silver  coin  in  domestic  circulation  to  its  original  cost. 
This  will  increase  the  actual  security  behind  the  silver  cer- 
tificates about  $50,000,000. 

Fifth. — That  a  Government  bond  bearing  2.555  per  cent, 
interest  be  authorized  to  an  amount  equal  to  the  outstand- 
ing legal  tender  notes  not  covered  by  the  gold  reserve,  ex- 
changeable  upon  application  for  such  notes,  and  said  bonds 
exchangeable  back  into  the  new  legal  tender  note,  payable 
in  gold  or  silver  at  pleasure  of  holder,  provided  the  gold 
reserve  shall  be  not  less  than  20  per  cent,  for  all  Govern- 
ment issues. 

Sixth.— That  all  silver  purchased  at  below  76.62  per 
ounce  be  authorized  to  be  held  for  delivery  at  the  tentative 
ratio  of  27  to  1,  and  be  so  coined  when  silver  advances  to 
73.82,  and  that  all  silver  be  held  for  coinage  or  delivery  at 
the  even  unit  ratios  next  above  cost.  This  at  the  present 
price  of  silver  would  advance  the  intrinsic  value  of  the  cur- 
rent silver  dollar  from  about  47^  to  80  cents.  At  76I  for 
silver  the  dollar  of  27-1  would  be  par  and  equal  to  gold. 


103 

Seventh. — That  the  forcing  of  silver  coins  into  circula- 
tion be  abandoned.  Silver  under  this  system  will  find  a 
natural  outlet. 

Eighth.— That  silver  coins  in  domestic  circulation  shall 
be  at  all  times  exchangeable  at  the  United  States  Sub- 
Treasury. 

Ninth. — That  the  circumferences  of  all  silver  coins  re- 
main unchanged,  the  thickness  to  represent  variations  in 
weight. 

Tenth.— That  the  importations  of  all  silver  coin  and  light- 
weight gold  coin  be  delivered  to  the  Government  to  be 
turned  into  bullion. 

Eleventh. — That  any  Government  bond  issue  may  serve 
as  security  for  National  Bank  notes. 

Twelfth. — That  the  Government  authorize  the  exchange 
of  all  existing  bonds  at  pleasure  of  holder  for  a  uniform 
bond  bearing  2.55  interest  on  the  basis  of  sale  price  of 
bonds. 

Remarks. 

The  declaration  of  the  Government  to  coin  silver  at  cost 
will  produce  confidence  in  the  intention  and  ability  of  the 
Government  to  maintain  the  gold  standard,  and  will  lead  to 
an  increasing  gold  reserve  through  deposits  of  gold  with 
the  Government. 

A  heavier  dollar  should  not  crowd  a  lighter  dollar  out 
of  domestic  circulation  any  more  than  the  present  silver 
dollar  interferes  with  the  payment  of  a  dollar  by  two  half 
dollars. 

LAWS   TO   BE   ENACTED. 

First.— That  on  and  after  the  first  day  of  the  next  Gov- 
ernment fiscal  six  months  the  Secretary  of  the  Treasury 
shall  purchase  daily  180,000  ounces  of  silver,  or  so  much 
thereof  at  lowest  offer,  not  exceeding  76.62  per  ounce,  the 
established  tentative  ratio,  and  issue  therefor  a  legal  tender 
note  payable  in  gold  or  silver  at  pleasure  of  holder. 

In  case  of  an  advance  or  decline  in  silver,  the  standard 
silver  dollar  will  follow  the  market  after  six  months.  Should 
however,  in  case  of  an  advance,  the  stock  of  available  silver 
become  exhausted,  the  standard  would  be  then  advanced. 
An  advancing  market  would  bring  more  and  more  of  the 
Government  silver  upon  the  actual  gold  value,  and  a  de- 


104 

dining  market  is  provided  for  by  a  safety  fund  obtained 
from  the  difference  of  coinage  at  the  even  unit  ratio  next 
above  cost  and  actual  cost.  The  safety  fund  thus  established 
from  the  present  stock  of  silver  would  suffice,  should  a  low 
gold  reserve  require  it,  to  bring  immediately  $50,000,000  of 
silver  even  at  the  present  low  price  to  the  gold  standard, 
and  thus  aid  the  reserve. 

By  this  system  the  intrinsic  value  of  the  current  silver 
coin  will  always  approximate  the  gold  value.  Slight  fluc- 
tuations are  covered  by  the  Government  credit  and  not  felt 
in  commerce  or  in  exchange,  but  when  due  to  fluctuations 
the  silver  coinage  is  of  full  gold  value  or  above,  an  outlet  is 
created  and  the  gold  kept  at  home. 

Second.  —That  when  the  gold  reserve  in  the  hands  of  the 
Government  shall  exceed  20  per  cent,  of  the  entire  Govern- 
ment issue,  any  United  States  bonds  may  be  exchanged  for 
legal  tender  notes,  provided  such  Government  issue  based 
upon  bonds  does  not  exceed  40  per  cent,  of  the  entire  Gov- 
ernment issue. 

TJiird. — That  the  National  Bank  note  issues  under  the 
present  law  be  suspended,  and  that  a  new  National  Bank 
note  issue  be  authorized  (not  a  legal  tender,  but  receivable 
by  the  Government  for  taxes)  to  the  full  par  value  of  Gov- 
ernment bonds  deposited,  such  issue  to  be  free  of  all  taxa- 
tion, and  the  cost  of  issue  to  be  borne  by  the  Government, 
interest  on  the  bonds  deposited  to  cease,  and  in  place  of  the 
5  per  cent,  reserve  fund  a  penalty  to  be  imposed  for  failure 
in  prompt  redemption  when  received  in  payment  of  taxes, 
and  that  such  National  Banks  only  shall  be  the  depositories 
of  public  funds. 

Fourth. — That  all  silver  notes  now  outstanding  shall  be 
canceled  when  paid  to  the  Government,  and  the  new  uni- 
form legal  tender  note  payable  in  gold  or  silver  at  pleasure 
of  holder  issued  therefor. 

Remarks. 

The  silver  in  the  silver  dollar  at  the  late  price  of  silver 
fluctuates  around  50  cents,  but  passes  in  domestic  use  on 
the  credit  of  the  Government  at  100  cents,  yet  cannot  be 
used  to  settle  balances  abroad.  Should  silver  be  coined  at 
cost,  the  silver  dollar  would    fluctuate  in  intrinsic    value 


io5 

around  par;  when  below  ioo  it  would  likewise  pass  for  ioo 
on  the  credit  of  the  Government,  but  when  at  par  and  above 
it  would  settle  balances  abroad— and  keep  gold  at  home, 
and  not  effect  exchanges,  for  the  gold  standard  would  be 
firm  and  immovable. 

There  is  at  present  a  loss  of  upwards  of  $100,000,000  on 
the  Government  silver,  but  under  this  system  this  loss  will 
gradually  be  recovered. 

The  rate  of  2.555  is  equal  to  7  cents  per  $1,000  per  day, 
convenient  in  the  monetary  system  for  the  exchange  and 
re-exchange  of  bonds  and  currency,  and  a  rate  that  will 
likely  prevent  the  bonds  selling  below  par  at  all  times. 

The  bonds  should  be  issued  in  amounts  of  $100  and  up- 
wards to  facilitate  the  free  exchange  of  currency  for  bonds  ; 
this  is  also  one  of  the  defenses  of  the  gold  reserve. 

This  system  is  the  result  of  close  and  intent  study  of 
many  years,  and  not  only  offers  to  us  a  perfect  currency, 
but  also  to  every  nation  upon  the  earth  ;  it  will  benefit  par- 
ticularly our  sister  American  republics,  by  offering  them 
a  system  that  will  prevent  the  ruinous  fluctuations  between 
their  silver  standards  and  the  standards  of  the  commercial 

world. 

Fred'k  Wm.  Luttgen. 


United  States  Senate,  January  27,  1896. 

Mr.  Fred'k  Wm.  Luttgen, 

New  York  City. 
My  Dear  Sir.— I  beg  to  thank  you  for  your  letter  of 
the  23d,  and  wish  to  say  that  I  think  there  are  some  good 
suggestions  in  it  which  shall  receive  my  consideration. 

Yours  truly, 

S.  B.  Elkins. 

New  York,  N.  Y.,  March  16,  1896. 

Hon.  Charles  N.  Fowler, 

House  of  Representatives, 

Washington,  D.  C. 

Dear  Sir,— I  fully  agree  with  the  proposition  set  forth 
in  your  letter  as  to  what  is  required,  but  doubt  the  advisa- 


io6 

bility  of  issuing  at  present  a  bond  as  low  as  2  per  cent,  inter- 
est for  the  purpose  of  underlying  an  elastic  currency,  nor 
favor  putting  upon  the  Government  any  losses  in  refunding 
outstanding  bonds.  As  one  who  has  given  the  question 
thorough  study  and  has  arrived  at  a  conclusion,  I  may  be 
considered  as  not  without  prejudice,  and  consequently  not  en- 
titled to  offer  criticism  on  your  bill,  however  kindly  invited 
by  you  in  your  endeavors  to  arrive  at  a  system  for  the  best 
interests  of  the  nation  at  large  ;  and  whatever  value  my 
familiarity  with  the  subject  may  give  to  my  criticism,  may 
be  offset  by  the  fact  that  I  have  arrived  at  an  opinion  as  to 
the  necessary  solution. 

The  fifteen  objects  which  your  letter  enumerates  to  be 
attained  by  your  bill  would  per  se  be  fully  attained  by  my 
system  ;  but  I  do  not  feel  that  your  bill  would  answer  in 
practice  your  requirements.  The  third  object  enumerated 
in  your  letter  (to  remove  every  possible  doubt  affecting  the 
character  of  our  money)  practically  covers  the  field.  As  I 
said,  I  do  not  think  that  your  proposition  is  broad  and 
sound  enough  to  accomplish  this.  I  hold  that  the  Govern- 
ment only  should  create  monej^,  and  that  no  system  delegat- 
ing this  power  to  any  corporation  will  stand  the  test  of 
time.  The  money  must  be  gold,  silver  and  paper,  exchange- 
able at  all  times  at  the  pleasure  of  the  holder. 

The  present  National  Banking  system  was  inaugurated 
during  times  of  war.  Concessions  were  made  that  the 
banks  in  return  might  assist  and  strengthen  the  Govern- 
ment credit ;  but  of  late,  and  during  the  present  adminis- 
tration, the  National  Banks  have  held  the  Government  by 
the  throat,  and  seem  to  control  the  press  of  the  country. 
The  National  Banking  laws  must  be  remodeled  that  in 
future  National  Bank  note  circulation  may  be  subsidiary 
and  not  antagonistic  to  the  Government  circulation  as  at 
present. 

The  measure  now  before  Congress  to  authorize  National 
Bank  note  circulation  to  par  value  of  bonds  deposited 
should  be  defeated  at  all  hazards;  for  the  only  means  of 
defence  of  the  gold  reserve  which  the  Government  has  at 
present  is  its  limited  control  over  the  circulation.  This 
power  has  been  ignored  by  the  present  administration,  and 
bonds  have  been  sold  and  the  proceeds  deposited  in  banks. 
The  National  Banks  are  a  constant  menace  to  the  gold  re- 


107 

serve.  Here  is  an  "  endless  chain  "  aided  by  the  adminis- 
tration in  more  than  one  way.  All  Government  deposits 
should  be  withdrawn  from  banks,  and  not  resumed  until 
such  deposits  represent  surplus  revenue. 

The  above  measure  now  before  Congress  would  create 
new  dangers  for  the  gold  reserve ;  but  a  law  should  be 
enacted  that  no  further  National  Bank  note  circulation 
shall  be  issued  except  when  the  gold  reserve  is  above  $100,- 
000,000.     The  Government  must  relieve  itself  of  this  yoke. 

I  believe  the  monetary  question  will  be  solved  by  the 
Republican  party  in  a  manner  that  will  place  the  credit  of 
the  Government,  although  of  a  debtor  nation,  equal  to  that 
of  Great  Britain,  and  no  patchwork  should  at  present  be 
enacted.  Many  advocate  a  system  which  would  offer  a 
stable  standard  for  the  debts  to  our  creditors  abroad,  but 
would  naturally  subject  our  domestic  affairs  to  the  dangers 
of  frequent  panics. 

This  is  not  sound  money  and  represents  my  principal  ob- 
jection to  your  bill.  Let  us  have  a  system  sound  at  home, 
and  our  creditors  abroad  will  find  it  equally  sound  and 
stable.  The  proper  solution  will  be  so  simple  that  no 
board  of  finance  or  commission  is  required.  Simplicity 
is  the  necessary  characteristic  of  sound  finance.  It  is  within 
our  power  to  inaugurate  the  most  perfect  monetary  system, 
which  even  England  will  find  it  policy  to  adopt,  and  this 
will  be  a  system  by  means  of  which  silver  will  protect  the 
gold  standard  and  not  antagonize  it  as  heretofore. 

Our  position  is  a  peculiar  one,  for  we  are  the  only  debtor 
nation  of  the  four  or  five  leading  commercial  nations.  The 
monetary  solution  is  not  to  be  found  in  history.  In  the  past 
and  the  world  over  silver  has  fought  gold  as  a  monetary 
metal.  In  the  future,  upon  silver  as  an  aid  to  gold  will 
depend  our  commercial  greatness. 

Yours  very  truly, 

Fred'k  Wm.  Luttgen. 


io8 

June  6,  1896. 

To  the  Secretary  of  the  Reform  Clab  Committee  on  Sound  Cur- 
rency : 

Dear  Sir, — Yours  of  the  3d  to  hand,  for  which  please 
accept  my  thanks.  I  have  my  doubts  about  the  work  of 
your  Club,  and  fear  it  will  cost  the  nation  heavily. 

That  the  gold  standard,  a  unit  of  25.8  grains,  must  be 
maintained,  of  that  there  is  no  doubt  ;  but  you  are  not 
working  for  this,  but  to  replace  Government  issues  by  a 
doubtful  bank  issue.  This  one  desire  on  your  part  blinds 
you  ;  you  do  not  realize  the  situation.  There  has  been  in 
the  past  no  controlling  sentiment  for  the  coinage  of  free 
silver  for  account  of  the  public  in  any  section,  nor  do  1 
think,  notwithstanding  the  suffering  and  shrinkage  of  values 
since  gold  monometallism  was  inaugurated  in  1893,  that  it 
will  prevail  this  year.  Nothing  but  a  continuance  of  gold 
monometallism  will  lead  to  the  free  coinage  of  silver  for 
account  of  the  public. 

We  are  now,  since  1893,  for  the  first  time  in  the  history 
of  the  nation  on  the  gold  monometallic  basis  (gold  standard 
and  gold  monometallism  are  two  different  things). 

The  depression  this  has  caused  is  falsely  attributed  to 
other  causes ;  but  so  great  is  the  love  for  sound  money, 
that  I  do  not  fear  for  a  change  of  standard  unless  another 
panic  should  take  place  while  gold  monometallism  prevails, 
when  no  power  can  prevent  our  going  upon  a  silver  stand- 
ard for  a  time. 

The  greatest  evil  of  our  monetary  system  is  the  fact  that 
the  circulation  of  the  banks  is  not  under  Government  con- 
trol. Since  1893,  the  National  Banks  have  had  the  Govern- 
ment by  the  throat.  It  is  imperative  that  the  East  come 
forward  to  make  sound  the  money  we  have,  and  discard 
the  men  who  are  struggling  at  all  hazards  to  secure  circu- 
lation at  the  expense  of  the  public. 

Fred'k  Wm.  Luttgen. 

Memorandum. 

Mr.  Charles  S.  Fairchild  was  Chairman,  and  Mr.  L. 
Carroll  Root  was  Secretary,  of  the  Reform  Club  Commit- 
tee on  Sound  Currency,  and  Mr.  Charles  S.  Fairchild  is  also 
Chairman,  and  Mr.  L.  Carroll  Root  is  also  Secretary,  of  the 


109 

Committee  on  the  Banking  System  under  the   Indianapolis 
Monetary  Commission. 

It  would  seem  that  the  National  Banks,  not  succeeding 
in  gaining  the  support  of  the  public  through  the  Reform 
Club,  have  reorganized  under  the  Indianapolis  Currency 
Commission  for  the  purpose  of  accomplishing  their  designs. 


The  following  was  published  June  10,  1896,  previous  to 
both  National  Conventions: 

MONEY  PLANK  SUGGESTED   BY   "THE   LUTT- 
GEN  MONETARY  SYSTEM." 

We  believe  that  the  material  interests  of  our  citizens 
demand  the  maintenance  of  a. national  currency,  every  dol- 
lar of  which,  whether  in  gold,  silver  or  paper  notes,  shall 
be  of  equal  value  and  of  equal  debt  paying  or  purchasing 
power  as  the  most  equitable  and  stable  measure  of  value 
or  medium  of  exchange,  upon  an  unalterable  gold  stand- 
ard and  dollar  unit  of  25. 8  grains  of  standard  gold  as 
established  by  Act  of  January  18,  1837,  and  as  declared  the 
policy  of  the  Government  by  law  of  1890,  and  we  now 
declare  in  favor  of  the  firm  and  honorable  maintenance  of 
that  standard. 

We  demand  the  use  of  both  gold  and  silver  upon  the 
Gold  Standard  as  money  of  final  redemption  and  contend 
that  the  Government  should  not  derive  any  revenue  what- 
ever from  the  coinage  of  either  gold  or  silver,  a  practice 
destructive  of  sound  money  and  undermining  every  in- 
dustry. Nor  shall  the  Government  suffer  loss  beyond  the 
cost  of  coinage. 

We  demand  that  the  coinage  of  gold  shall  be  free  and 
unlimited  at  all  times  to  the  public,  but  the  coinage  of  silver 
shall  be  only  for  Government  account  by  equal  daily  ac- 
quisitions of  bullion,  to  the  fullest  extent  consistent  with 
the  maintenance  of  the  gold  standard,  that  silver  in  thus 
entering  the  monetary  system  shall  be  free  from  coinage 
charges  the  same  as  gold  ;  therefore,  that  any  so-called 
seignorage  or  surplus  over  coinage  standard  of  silver  shall 
be  held  as  a  guarantee  and  subject  to  maintaining  the 
redemption  quality  in  gold  of  the  silver  coin  as  provided 


no 

for  in  the  Luttgen  Monetary  System  to  make  silver  a  sub- 
sidiary money  of  final  redemption. 

We  contend  that  all  Government  money,  whether  of 
gold,  silver  or  paper,  shall  be  at  all  times  interchangeable 
at  pleasure  of  holder. 

We  condemn  the  present  administration  for  continuing 
to  coin,  under  present  conditions,  the  so-called  silver 
seignorage,  thereby  discrediting  silver  by  lowering  it  to  a 
token  money  and  thereby  endangering  the  gold  standard 
and  necessarily  limiting  the  employment  of  silver  in  our 
monetary  system. 

To  place  silver  upon  its  proper  basis  in  our  monetary 
system  we  demand  that  the  seigniorage  of  all  silver  now  in 
our  monetary  system  shall  be  restored  by  the  Government 
fiscal  system.  The  monetary  system  is  not  a  proper  source 
of  Government  revenue.  To  prey  upon  the  monetary 
system  for  revenue  is  dishonest  to  the  people,  for  such  rev- 
enue, by  undermining  the  monetary  system,  is  paid  by 
the  people  a  hundred  fold  ;  the  necessary  revenue  must  be 
obtained  from  other  sources. 

Thus,  such  silver  may  be  held  at  its  original  cost  and 
such  seigniorage  to  be  held  as  a  guarantee  to  bring  silver 
to  a  basis  of  redemption  money  by  regulating  the  ratio  as 
represented  by  "  The  Luttgen  Monetary  System." 

We  hold  that  all  United  States  silver  coin  in  circulation 
within  the  limits  of  the  United  States  shall  at  all  times  be 
considered  an  obligation  of  the  Government  payable  in 
gold  or  paper  at  pleasure  of  holder,  but  silver  coin  be- 
comes money  of  final  redemption  when  exported  or  melted 
to  be  used  in  the  arts ;  we  therefore  demand  that  any 
United  States  silver  coinage  re-imported  shall  be  delivered 
to  the  Government  to  be  turned  into  bullion  for  account  of 
owners. 

We  demand  that  all  bank  note  circulation  shall  at  all 
times  be  an  auxiliary  or  subsidiary  circulation  to  the  Gov- 
ernment circulation  and  not  antagonistic  thereto. 


Ill 

THE  LUTTGEN  MONETARY  SYSTEM, 

27  William  Street,  New  York, 

June  29,  1896. 
Mr.  Wm.  C.  Whitney, 

New  York  City. 

Dear  Sir, — A  platform  demanding:  First,  the  main- 
tenance of  the  gold  standard  and  unit  of  25.8  grains. 
Second,  the  free  and  independent  coinage  of  silver  for  Gov- 
ernment account.  Third,  that  all  bank  note  circulation 
shall  be  under  Government  control.  If  such  a  platform  were 
proposed  by  the  East  it  would  prevail  at  Chicago,  and  its 
candidate,  if  a  Democrat,  and  not  connected  with  the  present 
administration  nor  with  the  repeal  act  of  1893,  would  be 
elected. 

But  such  sophistry  as  expressed  in  the  Saratoga  plat- 
form will  have  no  chance  whatever.  In  making  the  above 
statement  I  speak  with  the  full  acquaintance  of  the  true 
sentiment,  both  in  the  West  and  South,  and  as  one  who  has 
perhaps  devoted  more  time  and  attention  to  the  solution  of 
the  monetary  question  than  any  one  man.  I  express  myself 
concise  and  positive,  and  will  add  that  I  am  for  the  absolute 
gold  standard,  and  equal  absolute  bimetallism,  but  I  could 
not  vote  for  a  candidate  nominated  on  a  platform  like  that 
of  Saratoga  which,  if  it  signifies  anything,  is  for  gold 
monometallism.  Since  1893  the  nation  has  been  on  a 
monometallic  basis  for  the  first  time  in  its  history.  Disaster 
upon  disaster  has  already  been  the  result,  but  this  is  nothing 
compared  to  the  disturbances  that  are  yet  to  follow  if  this 
policy  prevails. 

National  bimetallism  is  a  phantom.  Dr.  Arendt,  of 
Berlin,  says  :  "lam  in  hopes  of  formulating  soon  some  plan 
upon  which  to  act."  After  all  these  years  during  which 
this  term  has  been  used  for  political  purposes  and  for  specu- 
lative control  of  the  monetary  system,  its  advocates  have 
not  even  yet  outlined  a  plan.  The  general  public  is  com- 
mencing to  believe  that  only  fools  and  knaves  talk  inter- 
national bimetallism.  When  an  international  conference 
can  cause  the  moon  to  give  us  light  daily  from  sunset  to 
sunrise,  it  may  be  able  to  regulate  or  maintain  a  fixed  ratio 
between  the  two  metals,  but  not  before  then,  but  the  desire 
for   bimetallism   is  universal.     It   may    be   said  to   be    an 


112 

international  desire,  yet  bimetallism  can  only  be  perfected 
and  permanently  exist  when  following  natural  laws. 

The  East  continues  to  prate  about  "sound  money,"  but 
with  gold  monometallism  no  sound  money  is  possible  for  the 
United  States.  Let  us  see  what  this  eastern  sound  money 
means.  The  New  York  Clearing  House  banks  are  refusing 
silver  certificates  in  settlement  of  balances  between  each 
other,  discriminating  against  this  money  and  passing  it  into 
circulation  before  any  other.  If  the  desires  for  sound  money 
were  honest,  they  would  protest  against  the  Government 
deriving  a  revenue  of  about  75  millions  from  the  coinage  of 
silver.  Silver  has  been  taxed  to  death  by  the  Government. 
In  1895  the  executive  attempted  to  force  through  Congress 
a  bill  making  bonds  payable  in  gold,  a  piece  of  class  legisla- 
tion. Make  the  silver  notes  and  silver  which  the  banks  are 
taking  such  care  to  force  upon  the  people  payable  in  gold, 
and  the  question  about  bonds  will  not  arise. 

There  are  at  present  in  Congress  bills  for  the  refunding 
of  the  National  Debt,  and  for  increasing  the  National  Bank 
note  circulation  to  the  par  value  of  bonds.  These  are 
eastern  measures  and  represent  further  methods  of  under- 
mining the  Government  money  and  preying  upon  the 
people.  These  are  a  tew  of  the  acts  of  the  East  for  the  so- 
called  "sound  money."     I  could  enumerate  many  more. 

Sailing  under  this  false  cloak,  the  East  rests  by  applying 
abusive  epithets  to  the  South  and  West.  If  the  East  can- 
not be  brought  to  reason  before  the  Chicago  Convention, 
it  is  to  be  hoped  that  the  East  will  be  defeated,  both  at 
Chicago  and  at  the  November  election.  The  East  may 
then  realize  the  danger  its  course  is  leading  to. 

The  Executive  in  1893  controlled  the  Legislative  branch 
of  our  Government,  but  this  received  the  most  emphatic 
protest  from  the  people  at  the  election  of  1893,  and  at  every 
succeeding  election  with  such  force  that  no  future  President 
is  likely  to  repeat  the  experiment ;  therefore,  the  election 
even  of  a  free  silver  candidate  does  not  mean  free  silver.  It 
simply  means  that  the  East  will  have  been  forced  to  agree 
to  a  sound  bimetallic  money  system  on  the  gold  standard, 
not  within  the  influence  of  banks  or  speculative  capital,  and 
of  which  the  South  and  West  would  accept  to-day. 

The  national  credit  or  honor  is  not  at  stake,  for  the  West 
and   South  would  not  declare  for  silver   monometallism  if 


H3 

they  had  the  power.  The  Fifty-fifth  Congress  not  meeting 
until  December,  1897,  should  give  us  a  money  system 
superior  to  any  now  in  existence,  and  commensurate  with 
the  requirements  of  the  country. 

Patriotism  will  yet  prevail.  The  banks  have  been 
strangling  the  Government  for  many  years,  to  which  an 
end  must  be  put.  It  is  not  silver  that  threatens  us,  but  the 
manipulations  by  the  banks  to  secure  circulation. 

Yours  very  truly, 

Fred'k  Wm.  Luttgen. 

P.  S. — This  letter  touching  a  public  question,  I  reserve 
the  privilege  of  making  such  use  of  it  as  I  may  deem  proper 


New  York,  July  23,  1896. 
Mr.  William  C.  Whitney, 

New  York  City. 

Dear  Sir, — Permit  me  to  recall  your  attention  to  my 
letter  of  June  29th  and  the  corroboration  of  the  same  in  the 
statement  of  Congressman  Newlands,  at  St.  Louis,  yester- 
day. His  words  were  these  ;  "  It  is  not  intended  to  drive 
away  gold  or  to  debase  our  currency.  Our  purpose  is  by 
giving  silver  equal  privileges  with  gold,  to  raise  its  value 
and  by  diminishing  the  strain  of  gold  to  bring  the  two 
metals  to  a  parity."  No  honest  man  can  raise  any  objec- 
tion to  this  declaration.  Why  should  the  interpretation  of 
prejudice  of  republican  alarmists  or  of  freebooters  be  ac- 
cepted as  regarding  the  Chicago  platform  ?  The  reference 
of  16  to  1  and  the  coinage  of  both  gold  and  silver  guar- 
antees the  present  gold  standard  to  a  greater  extent  than 
the  appalling  silver  standard,  for  the  gold  standard  now 
exists  and  silver  cannot  be  so  coined  until  the  bullion  value 
is  such.  But  it  can  and  should  at  once  be  coined  at  a  mov- 
able ratio  in  accordance  with  the  market  value. 

The  Chicago  platform  when  properly  interpreted  is 
admirable,  although  I  think  it  was  a  mistake  to  revive 
Cleveland's  Income  Tax  scheme. 

Are  you  willing  to  join  in  a  movement  to  make  the  ex- 
isting Government  money  sound,  not  to  substitute  other 
circulation,  but  to  make  that  which  we  have  sound? 

Very  truly  yours, 

Fred'k  Wm.  Luttgen. 


H4 
New  York,  N.  Y.,  August  19,  1896. 

Mr.  Wm.  J.  Bryan. 

Dear  Sir, — Many  of  your  friends  have  been  sadly  disap- 
pointed in  regard  to  your  position  on  the  ratio  of  16  to  I. 
The  Chicago  platform,  not  unlike  such  declarations  on  the 
part  of  a  large  assembly,  is  contradictory  and  inexact  in 
several  details.  The  intention  undoubtedly  was  to  declare 
for  bimetallism,  but  you  give  it  the  interpretation  of  silver 
monometallism.  The  free  coinage  of  silver  is  the  all-im- 
portant point  aimed  at.  The  ratio  is  of  minor  importance 
to  be  adjusted  to  admit  of  silver  to  advance  to  the  present 
coinage  value.  Free  coinage  of  silver  (no  profit  to  the 
Government)  and  the  concurrent  circulation  with  gold  as 
unlimited  legal  tender  and  money  of  redemption  will  cure 
all  the  evils  you  have  so  ably  portrayed,  will  make  money 
less  stringent,  prevent  the  raids  upon  the  reserves  and  the 
interference  through  the  monetary  system  with  every  en- 
terprise. 

Free  coinage  of  silver  at  its  true  ratio  will  enhance  the 
price  of  silver  far  more  than  the  free  coinage  at  37 1|  grains, 
and  silver  monometallism.  The  proposition  that  silver  will 
advance  under  free  coinage  at  371^  grains  to  the  value  of 
gold,  cannot  for  a  moment  be  entertained. 

The  purchasing  power  of  any  silver  bullion  under  free 
coinage,  at  whatever  ratio  to  gold  it  may  be  coined, 
remains  the  same  and  does  not  diminish  the  available 
money  ;  1,000  ounces  of  silver  coined  at  its  bullion  value 
has  the  same  purchasing  power  as  1,000  ounces  coined  at 
3>7ll  grains  under  free  coinage. 

The  Democratic  party  and  all  true  bimetallists  have  a 
right  to  expect  you  not  to  endanger  the  present  campaign 
by  this  proposition  of  16  to  1,  which  will  be  an  injury  to 
every  one  ;  while  free  coinage  of  silver  at  its  true  ratio 
would  be  a  blessing  and  a  forerunner  of  prosperity 
unequalled  in  the  history  of  our  country. 

Do  not  put  upon  us  the  curse  of  silver  monometallism  ! 
The  country  has  already  suffered  enough.  The  farmer 
receives  little  enough  for  his  wheat  without  having  to  pay 
for  fluctuating  money.  The  silver  standard  would  force 
great  suffering  upon  the  farming  interests,  but  bimetallism 
would  reduce  the  competition  from  silver  countries. 


H5 

You  cannot  name  one  single  advantage  the  coinage  of 
371I  grains  would  have  over  a  true  ratio.  With  bimetall- 
ism you  can  be  elected  overwhelmingly  and  benefit  the 
country;  but  on  the  silver  standard,  never.  Such  is  the 
public  sentiment. 

Very  truly  yours, 

Fred'k  Wm.  Luttgen. 


New  York,  September  26,  1896. 

Mr.  Wm.  J.  Bryan, 

Present, 

Dear  Sir, — Many  Democrats  who  do  not  agree  with 
your  extreme  interpretation  of  the  Chicago  platform  would 
yet  like  to  be  able  to  conscientiously  cast  their  vote  for  you 
if  they  could  be  satisfied  that  you  would  undertake  no  arbi- 
trary acts  before  Congress  has  an  opportunity  to  legislate 
on  the  money  question.  The  law  of  1890  establishing  the 
parity  between  the  metals  superseded  or  amended  all  pre- 
vious laws,  and  is  the  law  which  you,  as  the  executive, 
would  make  oath  to  administer. 

It  is  fully  conceded  that  no  authority  exists  for  issuing 
bonds,  but  other  precautionary  measures  would  be  opened 
to  you  to  maintain  the  parity  of  the  metals.  Pardon  me, 
then,  for  making  the  suggestion  entirely  in  accordance  with 
your  utterances,  and  which  would  aid  very  much  in  your 
election,  that  you  state  at  Tuesday  evening's  meeting  that 
in  case  of  your  election,  until  Congress  convenes,  you 
would  endeavor  to  maintain  the  parity  of  the  money  metals 
as  directed  by  the  law  of  1890,  as  far  as  in  your  power,  and 
as  far  as  this  can  be  done  without  issuing  further  bonds,  for 
which  no  authority  exists,  and  that  legislative  power  being 
vested  in  Congress  and  not  with  the  executive,  you  would 
endeavor  to  carry  out  the  spirit  of  the  law  of  1890,  until 
other  legislation  should  take  its  place.  It  is  feared  that  you 
might  by  some  radical  action  precipitate  silver  monometal- 
lism upon  the  country  before  the  new  Congress  would  have 
an  opportunity  to  legislate  upon  the  subject. 

A  few  words  from  you  on  this  subject  would  bring  you 
many  votes  in  States  where  you  most  need  them.  I  con- 
gratulate you  on  your  decided  stand  against  National  Bank 


n6 

note  circulation  (not  against  national  banks  of  deposits  as 
opponents  state),  for  no  stable  money  system  can  exist 
where  such  circulation  is  permitted.  Gold  was  exported 
this  spring  by  speculators  to  break  the  stock  and  other 
markets,  and  every  industry  suffered  in  consequence.  Gold 
is  now  permitted  to  flow  back,  and  industrial  activity  is 
commencing  to  show  itself. 

Yours  very  truly, 

Fred'k  Wm.  Luttgen. 


The  Luttgen  Monetary  System. 
Fred'k  Wm.  Luttgen. 

27  William  St.,  New  York, 

January  9,  1897. 

To  the  Chairman  of  the  Monetary  Conference, 

Indianapolis. 

Dear  Sir, — I  beg  to  call  the  attention  of  your  honorable 
body,  convened  for  the  purpose  of  furthering  the  solution 
of  our  monetary  problem,  to  the  conclusion  derived  from 
ten  years'  practical  study  on  my  part  of  this  question. 

As  a  New  York  business  man  of  experience,  I  probably 
represent  the  only  one  who  has  given  so  much  time  and 
thought  to  this  subject. 

The  result  of  my  labors  I  have  formulated  into  a  com- 
plete monetary  system  which  provides  on  the  basis  of  our 
present  gold  unit  of  value  for  the  resumption  and  continued 
introduction  of  new  silver  into  our  monetary  system,  and 
provides  for  an  outlet  for  the  silver  in  settlement  of  inter- 
national balances  and  in  the  use  in  the  arts,  etc.,  in  concur- 
rence with  gold. 

This  system  is  entirely  automatic,  not  subject  to  mani- 
pulation ;  will  lessen  panics  and  prevent  future  suspension 
of  specie  payments  under  all  circumstances,  and  will  main- 
tain the  gold  standard  uninterruptedly,  enabling  our  Gov- 
ernment to  pay  all  its  obligations  in  either  gold  or  silver  at 
option  of  holder. 

The  introduction  of  this  system  will  not  in  any  manner 
disturb  or  be  detrimental  to  any  interests,  but  will  at  once 
give  confidence. 


ii7 

In  its  operation  in  protecting  the  gold  reserve,  the  sys- 
tem will  have  a  tendency  to  draw  gold  from  abroad  and 
thereby  force  the  policy  of  other  nations  to  adopt  the  same 
system  also. 

The  system  will  admit  of  the  continuance  of  the  existing 
National  Bank  note  circulation,  and  will  offer  equal  if  not 
greater  advantages  to  the  banks  for  the  future  and  without 
cost  to  the  Government. 

The  system  provides  for  an  elastic  uniformly  safe  and 
sound  currency,  upon  which  the  usual  bankers  and  commer- 
cial credits  may  rest  with  confidence. 

The  system  would  finally  settle  the  monetary  problem, 
remove  all  agitation  and  fears  of  threatening  silver  mono- 
metallism. 

I  have  thus  briefly  referred  to  the  general  features  upon 
which  my  system  is  based  in  order  to  bring  it  to  the  atten- 
tion of  your  honorable  body  that  when  your  committee  is 
appointed,  the  same  may  take  it  under  consideration. 

As  a  close  student  of  the  question,  I  have  read  every- 
thing that  has  been  uttered  on  the  subject  during  the  many 
years  of  its  active  agitation,  and  have  failed  to  recognize  a 
single  one  who  seems  to  comprehend  the  question. 

Our  present  monetary  system,  if  system  it  may  be 
called,  is  based  upon  two  great  fundamental  errors ;  unless 
these  errors  are  recognized,  no  remedy  is  possible. 

England  has  a  fair  monetary  system,  but  it  would  be  a 

poor  system  for  us,  absolutely  inapplicable.     The  Luttgen 

Monetary  System  would  give  us  a  system  superior  to  that 

of  England. 

I  remain, 

Respectfully  yours, 

Fred'k  Wm.  Luttgen. 


June  15,  1897. 
Synopsis. 


THE    LUTTGEN    MONETARY   SYSTEM. 

(Copyrighted.) 
This  system  represents  the   final  and  absolute  economic 
solution  of  the  monetary  problem,  which  has  agitated  this 
country  practically  since  its  existence,  and  which  has  been 
before  the  world  for  centuries. 


n8 

To  place  the  two  metals  of  gold  and  silver  upon  a  basis 
insuring  their  concurrent  circulation,  has  been  the  problem 
to  which  the  best  minds  for  generations  have  been  directed. 
As  both  metals  are  now  used  for  the  world's  money  to  the 
fullest  extent  of  their  production,  either  metal  alone  would 
be  insufficient  as  primary  or  redemption  money  for  the 
requirements  of  commerce.  This  is  fully  demonstrated  by 
the  difficulty  nations  experience  in  their  attempts  to  enter 
upon  a  gold  standard,  and  by  the  difficulty  even  England, 
France  and  Germany  experience  to  maintain  their  gold 
reserves,  favored  as  those  nations  are,  their  money  systems 
are  imperfect. 

One  metal  used  as  redemption  money  by  some  nations, 
the  other  metal  used  by  other  nations,  creates  fluctuations 
in  exchanges,  and  does  not  produce  concurrent  circulation 
of  both  metals.  A  fixed  ratio  does  not  create  bimetallism ; 
when  the  ratio  is  near  the  bullion  ratio,  an  alternating 
standard  will  be  the  result  with  its  fatal  fluctuations ;  when 
the  ratio  is  materially  removed  from  the  market  ratio,  the 
cheaper  metal  will  practically  represent  the  standard  per- 
manently notwithstanding  any  legislation,  aud  cause  con- 
tinuous fluctuations  in  exchanges  with  other  nations 
which  fluctuations  represent  largely  a  self-imposed  tax 
paid  to  other  nations ;  nor  will  a  fixed  ratio  lead  to 
the  adoption  of  the  same  by  other  nations,  but  it  will 
lead  other  nations  in  adopting  and  strengthening  the 
gold  standard,  and  will  operate  against  the  general 
use  of  silver  as  money.  A  nation  holding  the  position 
of  creditor  nation  might  be  successful  in  maintain- 
ing a  gold  standard  based  solely  upon  gold  redemption 
money,  but  such  a  standard  so  based  would  be  fatal  to  a 
debtor  nation,  a  position  the  United  States  finds  itself  in. 
The  attempt  of  Japan  to  establish  a  gold  monometallic 
standard  promises  to  be  unsuccessful. 

It  would  be  impossible  to  maintain  in  the  United  States 
the  gold  standard  based  upon  gold  alone  as  redemption 
money  without  the  recurrence  of  the  frequent  money  panics 
of  the  past.  The  problem,  therefore,  has  been  to  bring 
these  two  metals  into  such  relation  as  to  insure  their  con- 
current circulation,  by  which  both  metals  may  be  money  of 
final  redemption  under  a  gold  unit  of  value. 

By  introducing  silver  at  its  bullion  value  into  our  mone- 


n9 

tary  system,  the  Luttgen  Monetary  System  will  establish  a 
stable  money.  Stability  is  the  first  element  essential  to  sound 
money.  It  will  place  silver  in  a  position  not  antagonistic  to 
gold,  as  heretofore,  but  it  will  aid  gold  as  a  measure  of 
value,  and  practically  add  to  its  volume,  yet  not  depreciate 
its  value  for  both  metals  are  now  employed,  although  upon 
a  disturbed  plan.  This  system  will  be  prepared  to  con- 
tinue  to  absorb  both  metals  to  the  utmost  extent  of  their 
production  without  endangering  the  gold  standard. 

The  system  will  establish  true  bimetallism,  and  it  will 
do  this  without  the  aid  of  other  nations,  but  will  force  other 
nations  by  its  operations  to  adopt  the  same  system,  or  to 
suffer  the  loss  of  their  gold. 

This  system  will  continuously  admit  silver  as  money 
the  same  as  gold.  Place  it  upon  a  position  of  money  of 
ultimate  redemption,  and  establish  the  ratio  between  the 
two  metals  by  natural  laws  or  on  the  markets  of  the  world. 
It  is  automatic,  and  the  merchant  will  understand  its  opera- 
tion as  perfectly  as  the  Secretary  of  the  Treasury.  It  will 
forever  prevent  the  manipulation  of  the  currency,  and 
create  a  true,  honest  and  stable  money,  under  which  every 
industry  may  prosper. 

A  system  that  produces  no  radical  changes  will  not  be 
disturbing  or  injurious  to  any  interest,  but  will  create  con- 
fidence in  the  existing  money.  This  system  will  unite  the 
different  factions  on  the  money  question,  and  the  contest 
will  then  be  true  and  honest  money  as  against  the  National 
Banks. 

A  system  protecting  the  reserve  automatically  would  re- 
quire no  issuing  of  bonds,  and  will  in  no  manner  become  a 
burden  to  the  Government  or  the  people. 

This  system  will  gradually  recover  to  the  Government 
the  loss  sustained  on  the  present  silver,  and  will  not  alone 
build  up  our  mining  interests,  but  will  aid  the  farmer  in 
finding  a  better  market  for  his  grain  by  removing  the  fluc- 
tuations in  exchanges  with  silver-standard  grain-producing 
exporting  countries,  which  have  been  largely  the  cause  of 
depressing  prices. 

The  proper  solution  of  our  monetary  system,  as  well  as 
the  world's  problem,  will  place  no  restriction  upon  the  con- 
veniences of  the  people  and  be  prepared  to  coin  or  issue 
gold,  silver  and  paper  in  such  denominations  as  the  public 


120 

convenience  may  demand.  Statisticians,  impracticable  from 
the  nature  of  their  employment,  have  suggested  restricting 
gold  to  larger  denominations,  and  even  the  same  restriction 
on  paper  money  that  silver  might  enter  into  circulation. 
The  Luttgen  Monetary  System  enables  silver  to  enter  into 
circulation  by  preference  on  the  part  of  the  public. 

The  test  of  sound  money  is  the  privilege  ex- 
tended TO  THE  creditor  to  take  either  gold,  silver 

OR  PAPER  AT  HIS  CONVENIENCE,  AND  THE  ABILITY  OF  THE 
GOVERNMENT  TO  PAY  EITHER  AS  DEMANDED. 

Under  this  system  silver  will  be  legal  tender  to  any 
amount,  and  the  Government  at  all  times  prepared  to  ex- 
change the  same  for  gold. 

When  the  silver  coin  under  this  system  is  shipped  abroad 
or  taken  without  the  limits  of  the  United  States,  it  is  so 
taken  in  final  settlement,  and  can  only  be  returned  at  its 
bullion  value.  This  is  practically  the  case  with  gold,  for 
light-weight  gold,  regardless  of  the  Government  stamp 
upon  it,  would  not  be  received.  Under  this  system  silver 
will  receive  the  benefit  of  its  more  general  use  as  a  money 
metal,  which  it  cannot  receive  under  a  fixed  arbitrary  ratio. 

The  existing  money,  whether  of  Government  or 
National  Banks,  would  in  no  manner  be  disturbed,  but 
further  extensions  would  be  controlled  by  the  system. 

It  will  bring  the  National  Banks'  circulation  under  the 
Government  control,  and  will  prevent  antagonism  on  the 
part  of  the  National  Banks,  for  it  is  entirely  due  to  the  op- 
position of  the  National  Banks  that  popular  confidence  in 
Government  money  was  for  a  time  shaken. 

The  gold  reserve  will  be  protected  by  silver  of  intrinsic 
value,  and  not  by  the  sale  of  bonds.  Under  this  system  the 
silver  now  in  the  Government  vaults  will  find  an  outlet 
without  loss  to  the  Government. 

This  system  will  accomplish  more  for  the  human  race 
than  the  various  applications  of  steam  and  electricity. 

Had,  for  instance,  after  the  failure  of  the  International 
Monetary  Conference  in  1892,  Congress  adopted  the  Lutt- 
gen Monetary  System  in  the  winter  of  1892  and  1893,  the 
savings  to  the  people  would  have  been  thousands  of  mil- 
lions of  dollars.  Let  us  suppose,  for  instance,  that  of  the 
seventy  millions  of  people  sixty-nine  millions  at  least  have 
on  an  average  lost  through  the  money   panics  of   1893  to 


121 


1896  not  less  than  $100  each,  whether  in  loss  of  wages,  de- 
pression of  products  or  investments,  etc.,  this  would  repre- 
sent $6,900,000,000,  an  amount  greater  than  the  cost  of  the 
War  and  all  deposits  in  banks,  and  the  importance  of  the 
Luttgen  Monetary  Svstem  will  be  realized.  The  other 
million  of  inhabitants  may  represent  those  who  were  so  for- 
tunate-not  to  have  suffered  loss,  and  the  reckless  speculators 
who  forced  these  panics  upon  the  country.  With  a  loss 
perhaps  far  exceeding  $7,000,000,000,  it  is  not  surprising 
that  a  single  schemer  may  have  acquired  upwards  of  $100,- 
000,000  during  the  period.  Before  such  figures  the 
tariff  is  a  matter  of  but  slight  importance.  An  effort  is  now 
made  by  a  clique  to  control  permanently,  through  the  Na- 
tional Banks,  the  monetary  system  of  the  country,  this 
powerful  instrument  of  making  the  masses  pay  tribute  to 
the  few,  as  the  past  years  have  demonstrated.  It  is  the  duty 
of  every  true  American  to  frustrate  this  effort. 

Fred'k  Wm.  Luttgen, 

27  William  Street,  N.  Y. 


New  York,  July  15,  1897. 

The  foregoing  synopsis  of  the  Luttgen  Monetary  Sys- 
tem was  mailed  to  the  Chairman  of  the  Indianapolis  Com- 
mission, and  the  following  acknowledgment  received. 

The  Monetary  Commission, 
Washington,  D.  C,  September  28,  1897. 
Sir: 

I  have  received  your  typewritten  statement  of  the  Lutt- 
gen Monetary  System,  which  will  be  laid  before  the  Com- 
mission for  consideration. 

Thanking  you  for  your  suggestions,  I  am, 

Respectfully  yours, 

George  F.  Edmunds, 

Chairman. 
Fred'k  Wm.  Luttgen, 

27  William  Street, 

New  York  City. 


PART     IV. 

APPENDIX. 


A   MODERN   FEUDAL  SYSTEM. 

The  social  condition  of  the  United  States  at  the  present 
time  is  one  of  great  unrest,  and  men  are  asking  each  other 
"how  will  it  terminate?"  The  writer  in  his  travels  has 
frequently  had  this  question  put  to  him  by  absolute 
strangers,  demonstrating  the  dissatisfaction  with  the  order 
of  things  as  they  now  exist. 

The  civil  war  resulted  in  the  liberation  of  the  black 
man,  but  under  the  cover  of  the  nursed  prejudices  of  the 
war,  the  "  continued  waving  of  the  bloody  shirt,"  a  great 
majority  of  the  white  men  were  enslaved  by  the  establish- 
ment of  laws  throughout  the  forty-five  States  of  the  Union 
creating  industrial  corporations,  entering  into  direct  com- 
petition with  the  individual  in  his  struggle  to  make  a 
living. 

There  has  been  since  the  close  of  the  war  too  much 
legislation  in  favor  of  concentrated  capital  and  the  absolute 
abandonment  of  the  principles  of  the  Constitution  guaran- 
teeing to  each  man  alike  "  liberty  and  the  pursuit  of  happi- 
ness." By  means  of  legislation  a  modern  feudal  system  has 
been  established  in  this  country  more  oppressive  than  the 
feudal  system  of  history.  Almost  every  honest  producer 
within  the  United  States  is  compelled  to  pay  tribute.  The 
modern  feudal  lords  are  a  class  of  men  who  may  be  com- 
pared to,  and  who,  if  they  had  lived  in  former  times,  would 
have  been  "  Knights  of  the  Road."  They  are  the  "Jesse 
James  "  of  the  West,  except  that  they  go  further  and  influ- 
ence the  legislators  to  legalize  their  robberies.  If  Jesse 
James  had  had  the  power  over  the  Legislature  to  make 
his  acts  legal,  he  would  have  been  on  a  par  with  our  pro- 
moters and  reorganizers. 


123 

Some  of  the  means  through  which  this  modern  feudal 
system  is  enforced  to  draw  tribute  from  the  masses  are  the 
industrial  corporations  or  trusts,  many  of  which  not  alone 
oppress  their  competitors,  extort  from  the  consumers,  but 
use  their  business  as  a  pretense  to  unload  upon  the  public 
watered  stock  absolutely  valueless.  Railroads  are  managed 
in  the  interest  of  the  bondholder  for  the  purpose  of  wreck- 
ing them  and  for  the  purpose  of  reorganization.  This  has 
become  such  a  national  abuse  that  legislation  on  the  subject 
under  the  Interstate  Commerce  Law  is  imperatively  de- 
manded. 

The  United  States  Government  some  years  since  con- 
demned the  method  of  the  Louisiana  Lottery  and  refused 
the  use  of  the  mails  to  that  corporation.  It  would  be  more 
important  for  the  Government  to  take  cognizance  of  the 
fraudulent  securities  put  upon  the  markets  by  industrial 
corporations  and  by  the  reorganizations  of  railroads. 

A  commission  should  be  appointed  under  the  Interstate 
Commerce  Law  to  pass  upon  the  bonds  and  stocks  of  all 
railroads,  and  when  found  to  have  been  issued  without 
equivalent,  the  mails  should  be  refused  to  all  matter  relat- 
ing to  them,  whether  as  to  their  sale  or  market  quotations. 
Such  a  law  would  make  further  transfers  of  these  fraudu- 
lent securities  to  innocent  holders  difficult. 

A  law  should  also  be  passed  under  the  Interstate  Com- 
merce Act  that  all  railroads  shall  be  controlled  by  the  com- 
mon stockholders,  and  that  all  bondholders  as  well  as  pre- 
ferred stockholders  shall  lose  their  votes  that  they  may  be 
entitled  to,  as  also  holders  of  common  stock. 

It  has  of  late  been  the  custom  on  the  part  of  reorganiza- 
tions to  put  the  stock  of  reorganized  railroads  in  trusts  for 
the  control  of  bondholders  ;  this  apparently  is  done  with  a 
view  to  prevent  action  on  the  part  of  the  stockholders 
against  any  frauds  in  the  reorganization  scheme,  and  to 
enable  bondholders  to  sell  their  watered  securities  without 
losing  control  over  the  road.  Such  trusts  of  common  stock 
should  be  pronounced  illegal,  and  no  Exchange  should  be 
allowed  to  trade  in  such  fraudulent  securities.  It  is  not 
only  to  the  interest  of  the  public  at  large,  the  holders  of 
the  common  stock,  that  the  road  should  be  operated  by 
them,  but  it  is  to  the  interest  of  the  merchant,  the  manufac- 
turer, the  farmer  and  all  those  who  travel  by  rail,  that  the 


124 

management  should  be  economic,  and  economic  manage- 
ment can  only  be  attained  when  the  control  is  in  the  hands 
of  the  common  stockholders. 

The  railroads  of  the  country  for  some  years  past  have 
been  managed  by  their  creditors.  It  would  be  a  poor  busi- 
ness man,  who,  having  paper  on  the  market,  would  permit 
the  holders  of  this  paper  to  manage  his  affairs ;  he  would 
soon  find  himself  without  a  business. 

When  a  railroad  is  not  absolutely  under  the  control  of 
its  common  stockholders,  States  through  which  the  rail- 
road passes  are  warranted  in  establishing  by  law  a  max- 
imum rate,  and  such  right  of  each  State  under  such  circum- 
stances should  not  be  contested.  The  reorganizations  of 
railroads  should  be  thoroughly  controlled  by  law.  When 
a  road  is  foreclosed  in  favor  of  any  bond  issue,  all  junior 
securities  should  be  cancelled  and  the  bond  issue  in  whose 
interest  the  road  is  foreclosed  should  equally  be  cancelled, 
and  should  represent  the  stock  of  the  railroad. 

The  present  fraudulent  practices  of  issuing  bonuses  to 
bondholders  in  preferred  and  common  stock,  issuing  stock 
for  accumulated  losses  of  past  years  and  issuing  stock  for 
the  expenses  of  reorganizations  should  be  prohibited  by 
law.  Such  issues  are  against  public  policy  ;  their  object  is 
to  defraud.  Such  issues  not  alone  draw  the  earnings  from 
the  producer  seeking  investments,  but  they  are  used  to 
justify  exorbitant  freight  and  passenger  charges.  This 
practice  has  become  of  late  years  so  general,  that  foreign 
capital  is  largely  used  in  these  nefarious  schemes. 

Where  the  public  have  not  been  reached  and  made  to 
pay  tribute  through  these  railroad  securities,  stocks  of  in- 
dustrial corporations  have  been  employed,  and  combinations 
have  seized  for  the  same  purpose,  the  street  railroads  in 
almost  every  town  and  village  and  issued  watered  stock  to 
secure  the  hard-earned  savings  of  the  local  mechanic  and 
laborer. 

It  is  these  men  who  call  the  honest  laborer,  when  pro- 
testing against  his  condition,  anarchist  and  other  similar 
epithets.  The  laborer,  when  suffering  from  want  and  hunger, 
may  at  times  forget  the  rights  of  others,  as,  when  on  a  strike, 
he  interferes  with  the  labor  of  non-union  men,  and  although 
misled  in  such  cases,  he  is  not  an  anarchist;  the  true 
anarchist  is  the  man  who  places  these  bogus  securities  upon 


I25 

the  market,  and  robs  the  laborer  of  the  savings  of  his  honest 
toil. 

These  combinations  of  capital,  having  practically  ex- 
hausted the  field,  have  now  another  scheme  by  which  they 
propose  to  lay  tribute  for  generations  to  come,  and  this 
scheme  is  termed  "  the  refunding  of  railroad  bonds."  They 
take  roads  perfectly  solvent,  whose  bonds  may  mature 
within  ten  or  fifteen  years,  and  renew  the  same  for  a  period 
of  perhaps  one  hundred  years  at  a  rate  of  interest  far  beyond 
that  which  the  credit  of  the  road  would  justify.  This  evil 
should  also  be  met  by  a  simple  law,  and  this  should  be  that 
no  bond  can  be  issued  for  a  longer  period  than  the  period 
necessary  for  its  accumulated  interest  to  equal  the  capital. 
Under  such  a  law,  a  5  per  cent,  bond  could  be  issued  but 
for  twenty  years  ;  a  4  per  cent,  bond  for  but  twenty-five 
years,  etc.  This  would  enable  a  road  to  recover  from  the 
wrongs  it  has  suffered  through  recent  reorganization  and 
refunding  schemes. 

That  all  existing  bonds  shall  so  mature  at  the  option  of 
the  debtor  when  the  interest  paid,  after  the  date  of  the 
enactment  of  this  law,  shall  equal  the  capital. 

Under  the  late  administration  these  combinations  became 
so  bold  as  to  even  practice  their  schemes  upon  the  Govern- 
ment; not  only  in  the  bond  transactions,  but  also  in  connec- 
tion with  the  various  Pacific  railroads.  This  question 
should  be  made  a  public  question  and  voted  upon  at  the 
next  general  election.  These  combinations  sapping  the 
very  life  of  the  nation  would  not  be  able  to  control  one  vote 
in  ten. 

A  directors'  meeting  of  some  of  our  corporations  with 
these  watered  stock  issues  represents  more  a  den  of  thieves, 
yet  these  men  mingle  with  upright  business  men. 

Before  the  New  York  State  Legislature  Investigating 
Committee  a  witness  stated  that  stock  of  his  corporation  had 
been  issued  for  good-will,  this  good- will  must  have  been 
the  facilities  afforded  for  placing  valueless  stock  upon  the 
public.  Stock  on  which  the  business  will  never  earn  a 
dividend,  and  on  which,  through  misrepresentation,  a  divi- 
dend may  occasionally  be  paid  for  the  purpose  of  fraud.  In 
the  reorganization  of  railroads,  stock  is  issued  for  accumu- 
lated losses,  for  expenses  of  reorganization,  for  bonuses  to 
the  bondholder,  all  of  which  should  be  prohibited  by  law. 


126 

The  honest  producer  of  wealth,  the  laboring:  man,  the 
mechanic,  the  farmer,  having  at  great  privations  saved  a 
portion  of  his  hard-earned  money  and  wishing  to  realize  a 
little  more  than  the  ordinary  savings  bank  interest  is,  under 
false  representation,  induced  to  invest  his  money  in  such 
watered  securities  to  discover  only  too  soon  that  his  money 
is  entirely  lost. 

The  practice  of  putting  upon  the  markets  these  bogus 
securities  and  the  wrecking  of  railroads  for  the  purpose  of 
reorganizations  has  wronged  many  a  family  who  were 
dependent  upon  the  income  of  their  investments  of  their  all. 

It  has  forced  women  and  young  girls  into  factories  and 
into  every  branch  of  business ;  yet,  more  than  this,  it  has 
caused  a  number  of  deaths  through  want  and  starvation. 

The  Louisiana  Lottery  claimed,  and  this  has  never  been 
contested,  to  pay  to  the  public  47^  per  cent,  of  the  money 
received;  but  promoters  and  reorganizers  return  nothing 
to  the  public  from  the  money  that  they  receive.  This  feudal 
system  extends  through  every  branch  of  business  and  is 
aided  by  legislation.  It  is  represented  in  the  forfeiture  by 
life  insurance  companies  of  the  first  year  or  two  of  pre- 
miums. It  enters  into  our  savings  banks.  The  savings 
bank's  source  of  profit  is  largely  derived  from  the  money  of 
small  depositors  which  is  withdrawn  before  it  is  entitled  to 
interest.  Capital  has  taken  advantage  of  this  fact  by 
depositing  the  largest  limit  received  by  the  savings  banks 
on  the  day  the  deposits  commence  to  draw  interest,  with- 
drawing the  same  on  the  day  interest  is  payable.  By  this 
operation  we  have  another  illustration  of  the  feudal  system 
making  the  necessities  of  the  poor  pay  tribute  to  capital. 
A  law  should  be  enacted  restricting  the  deposits  monthly 
to  one-sixth  of  the  present  maximum  deposit  received.  Dur- 
ing the  past  years  of  depressions,  deposits  of  savings  have 
fallen  off  materially,  but  they  have  been  replaced  by  deposits 
from  capitalists  who  are  careful  not  to  give  the  bank  the  use 
of  their  money  a  single  day  without  interest.  This  practice 
has  already  materially  forced  down  the  rate  of  savings  bank 
interest,  and  is  an  unjust  tribute  the  poor  are  paying  to  the 
rich. 

Another  instance  of  the  modern  feudal  system  is  the 
National  Bank  note.  This  note  has  no  reason  to  exist.  It 
is  secured  by  Government  bonds  on  which  the  interest  is 


127 

paid  by  the  Government,  and  forced  out  of  the  pockets  of 
the  people.  It  gives  an  insecure  currency,  endangers  the 
reserve,  and  places  the  entire  circulating  medium  within 
the  power  of  speculative  capital,  and  thus  the  farmer  has  to 
pay  tribute  in  the  low  price  of  his  grain,  the  manufacturer 
in  the  price  of  his  products,  the  miner,  the  merchant,  the 
laborer;  in  fact,  none  escape  paying  tribute  when  the  cur- 
rency of  the  country  is  being  manipulated.  Even  the  fre- 
quent changes  in  the  tariff  represent  another  feature  of  the 
feudal  system.  The  tariff  is  advanced,  and  heavy  importa- 
tions are  made  in  anticipation  of  the  advance  on  which  the 
Government  does  not  receive  additional  revenue,  although 
the  people  have  to  pay  the  advance.  It  has  been  stated  in 
Congress  that  the  recent  importations  of  wool,  for  instance, 
are  of  such  enormous  magnitude  that  further  importations, 
until  the  year  1901,  will,  in  comparison,  be  merely  nominal. 
We  have  here  importations  the  consumption  of  which  will 
extend  three  or  four  years  into  the  new  tariff,  yet  the  Govern- 
ment will  receive  no  benefit  therefrom. 

On  the  first  day  of  January,  1893,  there  was  in  the 

Treasury  of  the  United  States,  inclusive  of  the 

$100,000,000  of  gold  reserve $170,313,967  46 

Bonds   have   been   sold,    from    which    have   been 

realized 293,454,286  74 


$463,768,254  20 
On  October  31,  1897,  there  was  in  the  Treasury. .  .     207,756,099  71 

Deducting  this  from  the  above   amount,  we  have.  .  $256,012,154  49 

as  the  amount  spent  since  the  first-named  date  for  deficits 
in  the  revenue.  This  $256,000,000  represents  an  amount 
which,  through  Government  influence,  has  been  taken  out 
of  the  pockets  of  the  people  and  placed  in  the  pockets  of 
speculators.  It  represents  the  duties  on  the  importations 
in  anticipation  of  the  changed  tariffs;  but  this  does  not 
represent  all  that  the  people  have  thus  paid  within  the  last 
few  years,  for  we  have  had  three  different  tariff  bills  lately, 
while  the  period  here  named  covers  but  two.  That  the 
people  have  lost  this  $256,000,000  is  proved  by  the  estimates 
made  for  all  the  recent  tariffs,  namely,  that  they  would  be 
sufficient  to  provide  the  required  revenue  after  being  a  few 


128 

years  in  operation.     This  explains  also  the  great  struggle 
over  any  new  tariff  bill. 

A  simple  remedy  for  this  evil  would  be  that  when  it  is 
proposed  to  change  the  tariff  on  any  article,  whether  to 
increase  or  decrease  the  duty,  such  changes  should  be 
gradual,  and  not  exceed  5  per  cent,  per  year.  It  is  not 
right  to  impose  duties  on  the  people,  and  practically  allow 
these  duties  to  be  collected  by  individuals  for  their  own 
benefit. 

TARIFF. 

The  tariff  systems  in  vogue  since  the  War  have  been 
one  of  the  greatest  drawbacks  to  prosperity.  This  country, 
with  its  enormous  wealth,  enterprises  and  independence, 
should  have  a  tariff  drawn  up  in  a  few  lines,  establishing  a 
uniform  percentage  of  duty  on  all  manufactured  goods,  say, 
for  instance,  55  per  cent,  the  average  of  the  Dingley  Bill. 
Another  rate  of  duty  for  half-manufactured  goods,  say,  27^ 
per  cent.,  and  all  free  goods  to  pay  a  duty  of  2\  per  cent,  to 
cover  the  necessary  expenses  of  the  Custom  House,  etc. 
All  raw  material  upon  which  no  labor  has  been  expended, 
except  that  absolutely  necessary  for  transportation,  should 
be  admitted  against  a  nominal  duty  of,  say,  2\  per  cent. 
Changes  from  present  tariff  not  to  exceed  5  per  cent,  per 
annum,  or  when  such  changes  exceed  50  per  cent,  of  value, 
one-tenth  of  such  change  to  be  effected  annually. 

In  cases  where  specific  duties  are  advisable  to  protect 
against  fraud,  such  specific  duty  to  be  based  on  the  ad 
valorem  duty  of  the  standard  quality  of  the  article.  Articles 
subject  to  revenue  taxation  should  have  the  general  duty 
increased  by  the  revenue  tax.  Any  exception  deemed 
necessary  to  the  general  rule  should  be  passed  by  a  separate 
Congressional  bill  for  each  article.  A  1  per  cent,  rebate  on 
the  invoice  cost  should  be  given  to  the  importers  on  im- 
portations in  American  bottoms.  Should  it  be  found  that 
the  revenue  derived  from  the  tariff  is  either  in  excess  or 
below  requirements,  a  general  reduction  or  advance  of 
perhaps  2\  or  5  per  cent.,  from  time  to  time,  would  in  no 
manner  disturb  business,  nor  enable  speculators  to  drain 
the  public.  A  tariff  law  of  this  nature  would  require  no 
reciprocity  treatise,  for  its  nature  would  not  give  offense  to 
any  nation.     Nor  should  the  Government  take  cognizance 


129 

to  any  export  bounties  paid  by  any  nation.  Such  bounties 
are  strictly  internal  affairs  of  such  nations,  with  which  we 
have  no  right  to  meddle.  An  export  bounty  on  the  part  of 
any  nation  to  trade  with  us  should  be  looked  upon  as  a 
friendly  act  of  such  nation,  rather  than  otherwise.  But  it 
is  a  policy  which  the  United  States  should  never  adopt  in 
her  own  exportations.  The  duties  upon  raw  material  rep- 
resent another  feature  of  the  modern  feudal  system.  They 
favor  the  established  manufacturer  by  placing  the  cost  of 
manufacture  upon  an  artificial  basis,  and  thereby  discourage 
new  competition  or  the  erection  of  new  factories.  It  will 
thus  be  seen  that  taxing  raw  material  operates  against  the 
laborer.  No  drawbacks  should  be  allowed  under  any  cir- 
cumstances, for  they  represent  export  bounties. 

INTEREST. 

Another  feature  of  the  modern  feudal  system  is  established 
by  legislation  through  the  different  State  laws  on  the  subject 
of  legal  rate  of  interest  and  usury.  The  laws  of  the  different 
States  uphold  a  higher  rate  of  interest  than  the  ordinary 
average  market  rate.  Take,  for  instance,  New  York  State, 
the  legal  rate  of  interest  being  6  per  cent.;  in  consequence, 
the  small  borrower,  as  well  as  the  general  business  man 
having  a  running  account,  is  charged  6  per  cent,  interest 
when,  but  for  this  law,  in  many  instances  he  would  be 
charged  but  3  or  4  per  cent,  interest.  It  would  be  to  the 
interest  of  the  borrower  that  all  usury  laws  were  abolished. 
If  States  were  to  pass  a  law  making  3.65  per  cent,  the  legal 
rate  of  interest  in  case  where  no  contracts  to  the  contrary 
had  been  made,  and  making  all  contracts  at  a  higher  rate 
of  interest  terminable  at  six  months'  notice  on  the  part  of 
the  borrower  canceling  all  usury  laws,  such  States  would 
enjoy  a  lower  rate  of  interest  than  at  present.  In  case  of 
default  no  unpaid  interest  exceeding  3.65  per  cent,  should 
be  permitted  to  accumulate  for  a  period  greater  than  one 
year.  It  should  be  noticed  that  all  legislation  has  been  in 
favor  of  capital  and  against  the  laboring  man  and  producer. 
The  period  has  arrived  in  this  country  when  capital  must 
be  allowed  to  take  care  of  itself ;  nor  must  it  be  taxed,  for 
it  is  the  means  by  which  labor  can  attain  its  object,  and  such 
fallacies  as  the  income  tax  of  the  Wilson  Bill  or  the  pro- 
posed tax  on  transfers  of  stocks  and  bonds  should  be  aban- 


£30 

doned.  A  new  source  of  revenue  to  the  National  Govern- 
ment should  be  found,  however,  in  the  taxing  of  industrial 
corporations  and  the  non-dividend  paying  watered  stocks  of 
railroads ;  and  this  has  particular  reference  to  street  rail- 
roads, a  channel  through  which  tribute  is  being  collected 
from  the  local  masses  who  could  otherwise  not  be  reached 
by  bogus  securities. 

All  industrial  corporations  should  be  taxed  on  their  full 
capitalization  whether  represented  by  bonds,  stocks  or  bor- 
rowed moneys,  to  the  extent  of  say  2.55  per  cent  annually. 
All  railroad  securities  of  railroads  not  paying  dividends 
on  their  common  stock  and  receiving  more  than  3.65  per 
cent,  per  annum  as  interest  or  dividend  should  be  taxed  to 
the  extent  of  2.55  per  cent,  on  the  non-dividend  paying 
stock.  The  object  should  be  that  the  tax  on  the  non-divi- 
dend paying  stock  is  paid  by  the  senior  securities  receiving 
more  than  3.65  per  cent,  per  annum. 

Legislation  appears  to  be  controlled  by  these  corpora- 
tions to  such  an  extent  that  without  a  general  law  under 
the  Interstate  Commerce  Act,  their  abuses  it  seems  impos- 
sible to  check. 

The  recent  trial  of  the  Tobacco  Trust  proved  an  abso- 
lute farce,  for  among  the  jury  were  allowed  to  be  a  member 
of  another  corporation  and  a  broker  dealing  entirely  with 
corporations.  These  two  members  disagreed  with  the 
other  ten  jurors,  and  the  trial  proved  a  failure. 

Legislation  also  sanctions  an  evil  far  greater  and  more 
demoralizing  than  any  lottery  ;  that  is,  horse  racing.  Men 
of  means  raise  horses  for  this  purpose,  and  while  they  do 
not  directly  take  the  bets  of  the  office  boy  and  of  all  those 
who  cannot  afford  to  risk  money,  they,  however,  take  this 
money  indirectly  through  the  "purses"  which  they  re- 
ceive. They  are  practically  jobbers  in  petty  gambling  ; 
and  this  illustrates  another  method  of  the  modern  feudal 
system  for  making  the  masses  pay  tribute  to  the  few.  The 
betting  at  horse  races  is  a  national  evil  and  more  corrupt- 
ing than  any  other  influence. 

WAR  PREJUDICES. 
Under  prejudices  arising  from  our  late  war,  which  were 
especially  nursed  by  the  Eastern  States,  as  well  as  some  of 
the  farming  States  of  the  West,  legislation  in  favor  of  con- 


i3i 

centrated  capital  was  obtained,  which  legislation  could 
never  have  found  its  way  upon  the  statute  books  but  for 
this  controlling  prejudice. 

The  East  has  been  sadly  punished  for  this  spirit  by  the 
shrinkage  of  their  investments  through  reorganizers  and 
other  methods;  the  West  has  likewise  suffered  through  the 
manipulation  of  our  money,  and  the  watering  of  railroad 
securities,  upon  which  watered  securities  a  profit  is  de- 
manded through  higher  rates  of  freight. 

The  Nebraska  maximum  freight  case  is  an  outgrowth  of 
this  condition  and  represents  a  question  to  which  there  are 
two  sides  and  which  our  courts  will  find  it  very  difficult  to 
determine. 

The  promoter  tells  us  that  industrial  corporations  repre- 
sent the  natural  evolutions  of  commerce  ;  such,  however,  is 
not  the  case,  for  evolution  means  progression  and  would  in- 
dicate prosperity;  but  if  we  look  at  the  daily  papers  for  the 
quotations  of  stocks  of  some  of  our  industrial  corporations, 
we  find  of  those  ordinarily  dealt  in,  in  the  New  York  Stock 
Exchange,  the  following : 

American  Cotton  Oil,  valued  about 20 

Spirits,  "  9 

"  "       preferred,  valued  about 25 

Consolidated  Ice,  valued  about 35 


General  Electric, 
National  Lead, 

"         Linseed  Oil, 
U.  S.  Leather, 
U.  S.  Rubber, 


32 

32 

*5 

7 

16 

representing  upwards  of  $200,000,000  of  non-dividend  pay- 
ing capitalization. 

This  list  could  be  enlarged  to  many  times  its  size  and 
yet  would  represent  but  a  small  proportion  of  the  stocks  of 
industrial  corporations  on  which  no  dividend  is  paid. 
Such  a  condition  proves  that  these  corporations  are  not  the 
natural  evolution  of  commerce;  but,  on  the  other  hand, 
would  signify  a  degradation  of  commerce. 

These  industrial  corporations  seem  to  be  organized  for 
the  purpose  of  placing  upon  the  market  a  lot  of  valueless 
securities  to  enable  the  promoters  to  manipulate  the  same, 
and  through  such  manipulation  defraud  the  general  public 
out  of  their  moneys. 


132 

Such  stocks  of  industrial  corporations  should  be  treated 
in  the  same  manner  as  the  lottery  tickets  were  treated  by 
the  general  Government.  The  mail  should  be  closed 
against  all  transactions  of  the  same,  as  well  as  against  all 
newspapers  quoting  their  value.  These  corporations  are  a 
drain  upon  the  public  far  greater  than  the  wildest  lottery 
scheme  could  ever  become. 

SOCIALISTIC  DOCTRINES. 

Under  the  present  laws  socialistic  doctrines  are  carried 
out  in  practice  by  men  of  capital,  which  doctrines  when  ad- 
vocated by  those  suffering  under  this  modern  feudal  sys- 
tem are  denounced  as  anarchistic,  such,  for  instance,  as  the 
use  of  money  without  paying  interest  therefor.  Many  of 
our  industrial  corporations  have  outstanding  bonds,  pre- 
ferred stock  and  common  stock  ;  the  bonds  to  secure  the 
promoters,  the  preferred  stock  to  monopolize  any  possible 
profit,  and  the  common  stock  to  take  from  the  public  money 
without  paying  interest  therefor.  Such  corporations  are 
controlled  by  the  senior  securities,  the  owners  of  which  pay 
themselves,  in  addition  to  interest  and  dividends,  exorbitant 
salaries,  and  have,  according  to  the  magnitude  of  the  cor- 
poration, the  use  of  perhaps  many  millions  of  dollars  from 
the  public  represented  by  common  stock  on  which  no  divi- 
dend or  interest  is  paid.  Here  is  represented  another  of 
the  great  prevailing  evils  which  oppress  the  laboring  man, 
and  as  a  natural  consequence  forces  their  strikes  and  stag- 
nates industry. 

Laws  should  be  passed  under  the  Interstate  Commerce 
Law  as  well  as  by  each  State  separately,  that  all  corporations 
must  be  managed  by  the  common  stockholders,  that  pre- 
ferred stockholders  can  only  have  a  minority  representa- 
tion, and  that  such  stockholders  must  not  own  any  senior 
securities.  The  laws  should  also  limit  the  salaries  of  the 
officers  when  no  dividends  are  paid  on  the  common  stock. 
No  officer  in  any  corporation  paying  no  dividends  on  com- 
mon stock  should  receive  a  salary  exceeding  $3,000  per  an- 
num, until  such  time  when  dividends  may  be  paid. 

The  great  evil  as  regards  our  railroads,  and  in  conse- 
quence of  which  rates  are  manipulated  and  are  often  op- 
pressive, is  that  the  management  is  in  the  hands  of  the 
creditors  of  the  roads  or  bondholders. 


133 

We  have  to-day  many  reorganized  roads  whose  stock  is 
held  in  trust  by  the  bondholders  for  voting  purposes. 
Such  management  should  be  illegal,  and  exchanges  should 
not  permit  such  stocks  to  be  traded  in  on  their  boards. 
There  is  no  country  on  the  face  of  the  earth  to-day  so  over- 
ridden with  this  corporation  evil  as  the  United  States. 

Men  who  call  themselves  bankers  are  mere  schemers  to 
defraud  the  public.  This  country  has  gone  through  two 
wars  for  causes  trifling  in  comparison  with  the  conditions  that 
now  threaten  us,  and  legislation  should  at  once  be  enacted 
to  relieve  the  masses  for  the  future  safety  of  our  Republic. 

The  evils  of  the  reorganizer  and  promoter  are  not  diffi- 
cult to  overcome  if  the  question  is  made  a  National  issue. 
These  men  would  not  be  able  to  influence  one-tenth  of  the 
popular  vote,  and  when  these  questions  are  decided  by 
popular  vote,  legislation  would  be  sure  to  follow. 

BANK  NOTE  CIRCULATION. 

The  efforts  now  being  made  by  the  banking  interests  to 
secure  the  note  circulation  of  the  country  represent  the 
greatest  danger  to  our  future  prosperity.  Many  of  the 
individual  banker's  views,  published  in  answer  to  questions 
from  their  Commission  now  sitting  at  Washington,  are  ex- 
tremely conflicting.  They,  however,  all  have  the  common 
aim  to  benefit  themselves  at  the  expense  of  the  public. 

Why  the  Greenbacks  should  be  selected  by  them  as  a 
special  object  of  attack  is  not  intelligent,  for  these  Green- 
backs form  but  a  portion  of  our  circulation,  all  of  which  has 
been  declared  by  law  to  be  equal  and  to  be  maintained  on  a 
parity. 

We  have  at  present  in  silver,  silver  certificates,  Green- 
backs, Treasury  notes  and  gold  certificates,  about  $1,000,- 
000,000  of  Government  circulation.  The  position  of  this 
would  not  be  changed  if  it  were  reduced  by  $200,000,000  of 
Greenbacks  now  uncovered,  or  even  by  the  total  issue  of 
$300,000,000  or  more,  the  exact  amount  at  present  out- 
standing due  to  their  destruction  being  unknown.  The 
$346,000,000  originally  issued,  it  may  be  safe  to  estimate  have 
been  reduced  at  least  one-fourth  of  1  per  cent,  per  annum 
through  accidental  destruction;  this  would  aggregate  about 
$25,000,000,  leaving  about  $320,000,000  outstanding.  If 
these  were    withdrawn    there    would    yet   be    outstanding 


134 

about  $700,000,000  of  Government  currency  all  to  be  main- 
tained on  the  gold  standard.  In  addition  to  this  there  are 
at  present  $250,000,000  of  National  Bank  notes  redeemable 
in  legal  tender  money,  therefore  practically  redeemable  by 
the  Government  in  gold,  making  a  total  approximating 
$950,000,000.  It  will  be  seen  that  our  currency  is  such  that 
a  gold  reserve  must  necessarily  be  kept  by  the  Government. 

The  proposition  to  issue  bank  notes  for  the  $320,000,000 
of  Greenbacks  to  be  retired,  and  that  these  bank  notes  shall 
be  payable  by  the  banks  in  gold,  endangers  the  Government 
gold  reserve.  The  bankers  say  that  it  is  imperative  that  all 
United  States  legal  tender  notes  should  be  gotten  out  of 
the  way.  This  means  that  $1,000,000,000  of  United  States 
currency  must  be  gotten  out  of  the  way,  for  this  currency 
is  all  legal  tender. 

The  danger  of  authorizing  a  new  bank  issue  redeemable 
in  gold  by  the  bankers  would  be  a  justification  given  to  the 
banks  to  hoard  gold,  and  consequentlv  endangering  the 
Government  gold  reserve. 

In  my  publication  of  July  12,  1893,  I  advocated  the  es- 
tablishment of  branch  banks.  These  banks  should  be  more 
in  the  nature  of  branch  offices  of  the  parent  bank,  and  there 
should  be  no  restriction  as  to  the  location  of  such  branches. 
To  limit  such  branches  to  centers  of  but  a  few  thousand  pop- 
ulation betrays  no  knowledge  of  banking  or  the  require- 
ments of  the  country.  The  only  limitation  that  should  be 
imposed  on  the  establishment  of  such  branch  banks  should 
be  of  capital  and  surplus  and  the  time  of  its  existence  ;  for 
instance,  no  bank  should  be  permitted  to  establish  branches 
except  after  five  years  of  its  organization  and  then,  say,  only 
one  branch  to  each  $500,000  capital  or  surplus. 

It  any  State  in  the  Union  should  require  more  banking 
capital,  and  such  capital  is  provided  through  branch  banks 
established  in  its  principal  commercial  center,  local  institu- 
tions will  be  enabled  through  the  ordinary  course  of  bank- 
ing to  distribute  such  facilities  throughout  the  State.  It  is 
a  mistaken  idea  that  the  West  and  South  would  derive 
greater  banking  facilities  if  local  banks  were  permitted  to 
issue  currency.  It  is  not  this  currency  that  is  wanted,  but 
the  capital  from  our  larger  financial  centers. 

A  promiscuous  bank  note  circulation  is  one  of  the 
greatest  evils  that  could  befall  our  country  in  the  future. 


135 

BUCKET  SHOPS. 

Bucket  shops  representing  another  method  of  draining 
the  public  have  sprung  up  throughout  the  country,  and  they 
are  a  natural  sequence  of  the  work  of  the  reorganizer  and 
promoter. 

The  general  public  is  almost  always  disposed  to  buy,  or, 
in  other  words,  to  be  bulls  on  the  market,  and  are  also  in- 
clined to  purchase  the  low-priced  stocks.  Sharp  men,  recog- 
nizing this  tendency  on  the  part  of  the  public,  and  also  fully 
recognizing  the  worthlessness  of  stocks  that  have  passed 
through  the  reorganizes'  hands,  have  not  lost  the  oppor- 
tunity of  establishing  bucket  shops  throughout  the  country. 

These  establishments  are  organized  and  based  upon  the 
principle  that  the  majority  of  the  low-priced  stocks  are 
worthless  and  must  necessarily  decline  after  every  specula- 
tive advance;  in  other  words,  that  the  public  will  lose 
money  whenever  they  purchase  these  stocks. 

Another  feature  favoring  the  creation  of  bucket  shops  is 
that  our  New  York  Stock  Exchange  does  not  deal  in  less  than 
one  hundred  share  lots,  while  the  transactions  in  bucket  shops 
are  mostly  in  lots  of  ten  shares.  It  is  true  our  smaller  Ex- 
change deals  in  fractional  lots;  but,  due  to  a  pernicious  practice 
among  some  of  its  members,  their  customers  are  unable  to 
obtain  the  market  quotations  for  stocks  in  which  they  deal. 

It  is  a  custom  among  the  Exchanges  when  in  the  absence 
of  one  broker,  he  gives  the  orders  of  his  customers  to 
another  broker  for  execution  to  pay  a  commission  to  each 
other,  say,  $i  or  $2  per  one  hundred  shares.  In  the 
smaller  Exchange,  to  avoid  the  payment  of  this  com- 
mission to  each  other,  some  unprincipled  brokers  allow 
their  substitutes  to  take  the  transactions  of  their  customers 
for  their  own  account,  and  in  these  transactions  the  cus- 
tomer is  generally  wronged  from  |-  to  £  per  cent.  The  sub- 
stitute in  return  gives  the  first  broker  the  same  opportunity 
of  defrauding  the  substitute's  customers.  These  fraudulent 
transactions  the  brokers  term  "  love  orders.''  The  Ex- 
change should  take  cognizance  of  this  practice  and  see  that 
it  is  stopped.  It  is  a  deliberate  robbery.  Let  the  Exchanges 
stop  dealing  in  watered  non-dividend  paying  securities  and 
in  stocks  in  voting  trusts,  and  put  a  stop  to  all  irregular 
transactions  among  its  members,  and  the  bucket  shop  will 
have  no  longer  cause  for  its  existence. 


136 

UNITED     STATES     TREASURY     OFFICIAL 

STATEMENTS. 

The  Treasury  affairs  of  the  Government  have  never  been 
in  more  incompetent  hands  than  in  the  late  Mugwump 
administration.  We  find  in  the  Treasurer's  reports,  as,  for 
instance,  for  the  year  1894,  on  Page  XV,  the  total  stock  of 
money  given  as  $2,200,000,000,  and  the  stock  of  money  out- 
side of  the  Treasury  as  $1,700,000,000. 

The  Secretary  of  the  Treasury  estimates  in  the  total 
stock  of  money,  as  money,  both  the  silver  and  the  certifi- 
cates representing  the  same.  It  is  no  wonder  that  said  ad- 
ministration raided  the  gold  represented  by  the  outstanding 
Greenbacks. 

The  Secretary  of  the  Treasury,  not  satisfied  with  this 
general  statement  of  total  stock  of  money,  enters  further 
into  details,  and  gives  the  per  capita  of  this  fictitious  money 
as  equal  to  32.53.  This  shows  an  incompetency  that  is  dan- 
gerous to  the  welfare  of  the  business  community.  We  find 
the  same  or  even  a  worse  misrepresentation  in  the  report  of 
the  Controller  of  the  Currency  for  the  year  1896  on  page 
108.  The  Controller  gives  the  cost  to  the  Government  for 
continuing  the  Greenback  circulation  at  $339,000,000.  This 
statement  drawn  up  in  a  public  report  is  an  insult  to  com- 
mon sense  ;  it  is  the  result  of  an  erratic  brain,  and  there 
should  be  means  to  remove  from  office  any  one  who  is  in 
the  slightest  degree  connected  with  this  publication. 

It  is  hard  to  conceive  how  a  banker  can  take  the  author 
of  such  a  report  seriously;  yet  we  find  the  oldest  New 
York  bankers  cringing  before  a  stripling,  simply  because  he 
holds  a  public  office,  but  these  bankers  are  endeavoring  to 
wrong  the  public  by  monopolizing  the  circulation. 

The  position  of  the  Greenbacks  is  simply  this:  the  Gov- 
ernment has  saved  thereby  annually  $10,000,000.  This 
represents  the  savings  to  the  Government  since  the  Green- 
backs were  first  issued,  and  if  National  Bank  notes  had 
represented  this  circulation,  the  people  would  have  had  to 
be  taxed  $350,000,000  additional  for  the  benefit  of  the  Na- 
ional  Banks.  The  Controller's  figures  are  simply  rubbish, 
but  betray  the  influence  of  the  National  Banks  for  the  pur- 
pose of  creating  public  sentiment. 


137 


PANICS. 

During  several  political  campaigns  of  the  past,  the  Re- 
publican Party  has  been  charged  with  the  manipulation  of 
the  tariff  to  favor  certain  manufacturing  and  importing 
interests  ;  but  in  1892,  evidences  appeared  that  the  Demo- 
cratic Party,  as  it  was  then  constituted,  strengthened  by 
the  adventurous  element  of  the  Republican  Party,  was 
about  to  inaugurate  a  system  of  actively  manipulating  the 
money  of  the  country  by  means  of  which  greater  favorit- 
ism could  be  shown  than  by  the  tariff  manipulations  of  the 
Republican  Party. 

When  the  success  of  the  Democratic  candidate  became 
apparent,  thinking  men  trembled  for  the  future  of  our 
country,  and  their  worst  fears  were  realized  during  the 
Mugwump  administration.  This  country  has  never  gone 
through  four  years  so  fatal  as  those  from  1893  to  1897,  and 
the  apparent  losses  to  the  Government  are  insignificant 
compared  to  the  losses  sustained  by  the  people  through  the 
manipulation  of  our  money. 

The  panic  of  1893,  entirely  artificial  or  forced,  showed 
its  first  premonitory  symptoms  in  the  fall  of  1892.  The 
initial  steps  toward  creating  this  panic  were  apparently 
brought  about  by  the  parties  in  opposition  to  the  Reading 
Railroad  consolidation  scheme.  This  scheme  was  intended 
to  be  floated  on  the  tide  of  a  prosperous  Centennial  year  in 
1893,  but  the  influence  of  the  opposition  was  used  with  the 
banks  to  contract  loans,  and,  aided  by  the  failure  of  the 
Brussels  Conference,  newspapers  were  employed  to  decry 
the  silver  dollar  by  quoting  its  bullion  value  from  day  to 
day.  For  some  time  previous  to  this  period  gold  had  been 
manipulated  to  influence  the  stock  markets.  This  power 
formed  another  aid  in  producing  the  panic,  and  in  the 
struggle  of  the  National  Banks  for  circulation  further  sup- 
port was  obtained  for  the  efforts  to  create  distrust. 

The  element  which  left  the  Republican  Party,  together 
with  the  adventurous  element  of  the  Democratic  Party, 
succeeded  in  electing  their  nominee  in  November,  and  the 
financial  destiny  of  the  country  for  four  years  was  virtually 
in  their  power. 

The  year  of  1893  proved  to  be  the  most  disastrous 
single  year  in  the  history  of  the  country.    The  credit  of  the 


138 

Government  was  attacked,  distrust  created  everywhere, 
under  which  some  of  the  largest  and  most  prosperous  enter- 
prises broke  down. 

The  originators  of  this  panic  and  their  associates  reaped 
enormous  profits.  Trust  companies  and  banks  connected 
with  this  movement  made  profits  unparalleled  in  previous 
years  ;  but  this  was  not  all,  the  interference  of  the  executive, 
through  the  power  of  patronage,  with  the  legislative  branch 
of  our  Government,  threatened  to  pull  our  Government 
down  to  the  level  of  some  of  the  Latin  Republics  south  of 
us,  where  internal  strife  through  the  greater  power,  vested 
in  the  executive,  is  not  of  uncommon  occurrence. 

Our  Government  credit  suffered  materially  during  this 
period.  This  was  fully  attested  in  the  sale  of  bonds  in  the 
succeeding  years.  Every  means  of  misrepresentation  of 
truth  was  employed  to  intensify  the  panics  of  1893  and  1896. 
When  the  administration  in  1893  attempted  to  coerce  Con- 
gress, some  of  our  New  York  papers  came  out  with  prom- 
inent head  lines  "  Abolish  the  Senate  !  "  for  the  Senate  held 
out  in  its  endeavor  to  protect  the  public.  The  clamor 
became  so  great  that  even  the  Senate  was  finally  compelled 
to  submit,  but  it  was  only  induced  to  abandon  the  struggle 
against  the  practical  demonetization  of  silver  by  the  declar- 
ation that  the  policy  of  the  United  States  should  be  to  con- 
tinue the  use  of  both  gold  and  silver  as  standard  money, 
and  to  coin  both  gold  and  silver  into  money  of  equal  in- 
trinsic and  exchangeable  value;  but  no  attempt  has  been 
made  since  the  repeal  to  carry  out  this  promise  made  to 
the  Senate  and  to  the  public.  After  the  repeal  of  1893,  the 
situation  was  entirely  controlled  by  speculative  capitalists 
who  "  made  and  unmade  "  as  they  pleased. 

Gold  was  exported  and  withdrawn  from  the  Govern- 
ment to  force  the  Government  to  issue  bonds  against  which 
bank  circulation  could  be  issued,  and  through  this  bank 
circulation  other  money  was  realized  and  further  demands 
for  gold  made  upon  the  Government.  In  this  wild  oper- 
ation, capitalists  appear  to  have  had  the  full  sympathy  of 
the  administration,  and  practically  ordered  the  Govern- 
ment to  do  its  bidding.  Of  the  bond  transactions  two  are 
deserving  of  special  notice.  The  sale  of  February,  1895, 
not  attracting  particular  attention  at  the  time,  was  brought 
back  to   popular  notice  by   an  article  in  the    Yale  Review 


139 

of  May,  1895,  which  article  was  furthermore  published  in 
pamphlet  form  for  general  distribution.  This  publication 
had  more  the  character  of  an  apology  for  the  enormous 
profits  made  by  the  syndicate  on  that  transaction  ;  but  it 
betrayed  that  these  profits  were  unexpected,  for  it  would 
seem  that  a  low  price  for  the  coin  bonds  was  made  in  order 
to  coerce  Congress  to  authorize  a  bond  payable  in  gold. 
The  difference  to  the  Government  of  $16,174,770  was  ex- 
pected to  force  the  issue  of  gold  bonds,  and  the  public  com- 
menced to  realize  that  said  bond  transaction  had  been  more 
a  conspiracy  to  force  class  legislation  in  favor  of  the  bond- 
holders at  the  expense  of  other  Government  creditors. 

Coin  bonds  bearing  the  same  rate  of  interest,  having  a 
shorter  time  to  run,  therefore  of  less  value,  were  selling  in 
the  market  at  7^  to  10  per  cent,  higher,  which  would  seem 
that  the  syndicate  did  not  anticipate  having  its  offer  ac- 
cepted, but  expected  to  force  Congress  to  issue  a  gold 
bond,  and  the  astonishment  at  the  success  of  its  own  cupid- 
ity seems  to  have  been  the  motive  of  the  publication  of  the 
article  in  The  Review. 

During  the  interval  between  this  bond  sale  and  the  final 
bond  sale,  speculative  interests  even  dictated  to  the  Gov- 
ernment the  selling  price  of  its  bullion  to  further  exporta- 
tion. In  the  final  bond  sale  an  amount  so  far  beyond  even 
the  sentimental  requirement  of  the  Government  was  sold 
that  the  proceeds  in  gold  exceeding  the  $100,000,000  limit 
have  remained  in  the  Treasury  to  this  day  at  a  loss  of  heavy 
interest. 

It  was  stated  by  some  of  our  senior  Senators  on  the 
floor  of  the  Senate  that  the  executive  was  engaged  in  spec- 
ulation and  had  accumulated  great  wealth.  This  would 
seem  hardly  possible  in  view  of  the  enormity  of  the  crime 
that  it  would  represent.  American  history  has  fortunately 
not  yet  produced  such  a  character.  If  the  executive  who 
had  been  thrice  nominated  and  twice  elected  to  the  highest 
office  of  the  nation  had  been  engaged  in  speculative  ven- 
tures during  the  term  of  his  administration,  Benedict 
Arnold  would  no  longer  be  the  bane  of  American  history. 
If  the  Senators  who  made  reference  to  this  subject  had 
had  positive  information,  the  executive  should  have  been 
impeached  for  misdemeanor  in  office  before  his  term 
expired. 


140 


THE  CAMPAIGN  OF  1896. 

During  this  campaign  the  monetary  question  formed  the 
principal  issue.  It  is,  therefore,  well  to  look  at  the  differ- 
ent party  platforms  to  understand  the  true  sentiment  of  the 
people.  The  St.  Louis  platform  declared  against  the  free 
coinage  of  silver  except  by  international  agreement,  and 
that,  until  such  agreement  can  be  obtained,  the  existing 
gold  standard  must  be  preserved,  and  further  declared  that 
all  our  silver  and  paper  money  must  be  maintained  at  par- 
ity with  gold,  and  that  the  present  standard  must  be  main- 
tained. This  declaration  of  principle  is  very  ambiguous. 
It  declares  for  the  present  standard,  yet  agrees,  by  an  inter- 
national agreement,  to  a  change  of  standard.  Sound  money 
is  not  a  subject  for  international  agreement,  but  is  created 
by  each  State  independent  of  every  other  State.  The 
money  created  by  an  international  agreement  would  be  a 
fiat  money  and  more  unstable  than  if  created  by  one  State 
alone. 

The  St.  Louis  Convention  was  controlled  by  eastern 
speculative  interests  and  the  money  plank  was  drawn  up 
to  be  meaningless  for  the  purpose  of  retaining  control  over 
the  currency  of  the  country  to  further  speculation. 

The  Chicago  platform  declares  to  be  "  unalterably  op- 
posed to  monometallism."  When  this  plank  was  adopted,  it 
was  considered  that  the  money  question  was  fully  covered 
and  that  there  could  be  no  misunderstanding  as  to  the  prin- 
ciples of  the  party  ;  but  as  party  platforms  are  never  con- 
sistent and  drawn  up  more  to  conciliate  different  sentiments, 
we  find  added  the  demand  for  the  free  unlimited  coinage  of 
both  silver  and  gold  at  the  present  legal  ratio  of  16  to  1. 
This  is  not  only  in  opposition  to  the  first  declaration,  but  is 
an  utter  impossibility.  The  free  coinage  of  both  gold  and 
silver  at  the  ratio  of  16  to  1  or  any  other  fixed  ratio  has 
never  existed  in  practice  nor  ever  will  exist.  Such  a  law 
may  be  placed  on  the  statute  books,  but  it  will  create  mono- 
metallism of  either  one  metal  or  the  other,  with  all  its  attend- 
ant fluctuations  and  manipulations. 

The  candidate  of  the  Chicago  Convention  defeated  him- 
self and  elected  the  nominee  of  the  St.  Louis  Convention  by 
discarding  the  clear  and  emphatic  declaration  that  "  the 
party   was  unalterably  opposed  to  monometallism."     The 


141 

strongest  feature  in  favor  of  the  Chicago  platform  was  the 
discarding  of  the  Mugwump  administration,  which  party 
subsequently  held  their  convention  in  Indianapolis.  The 
candidate  of  the  Chicago  platform  has  wronged  his  party 
by  a  personal  interpretation  of  the  platform  and  thereby 
causing  it  to  suffer  defeat. 

We  have  now  seen  that  both  money  planks  of  the  two 
great  political  parties  are  contradictory,  and  were  drawn 
not  to  further  the  settlement  of  this  vital  question,  but  to 
draw  votes. 

The  Mugwump  convention  representing  the  then  admin- 
istration, National  Banks  and  speculators,  met  at  Indian- 
apolis.  Their  declaration  on  the  money  question  is  exceed- 
ingly illogical.  It  declares  that  gold  is  a  necessary  money 
of  large  affairs,  and  silver  of  minor  transactions.  We  have 
here  a  declaration  of  the  principles  advocated  during  four 
years  from  '93  to  '97,  and  furthermore  practiced  particularly 
by  the  National  Banks  forming  the  New  York  Clearing 
House,  to  make  the  United  States  bonds,  Greenbacks  and 
Treasury  notes  payable  in  gold  and  to  let  the  silver  take 
care  of  itself. 

The  Mugwump  tells  us  that  silver  is  for  minor  transac- 
tions, in  other  words,  for  the  poor  man,  who  does  not 
count.  There  cannot  be  any  honest  money  that  does  not 
place  both  metals  upon  a  basis  interchangeable  and  accept- 
able in  final  redemption.  This  party,  true  to  its  record,  is 
attempting  to  foist  upon  the  nation  a  bank  note  currency. 
The  experience  we  had  prior  to  the  war  should  frustrate 
any  such  efforts. 

STATE  BANK  NOTE  CIRCULATION. 

Following  the  failure  of  four  banks  in  Albany  in  the 
spring  of  1861,  the  Bankers  Magazine  said:  "A  radical 
change  in  the  banking  system  is  required  in  this  and  par- 
ticularly in  the  Western  States,"  and  it  speaks  of  the  New 
York  county  oanks  as  "  mushroom  concerns,"  and  says 
"  the  recent  course  of  events  in  Illinois,  Wisconsin  and  Mis- 
souri has  demonstrated  more  strongly  than  ever  the  inse- 
curity of  the  bank  note  currency  of  these  States,  and  of 
every  State  where  bank  notes  are  issued  on  the  security  of 
State  bonds." 


142 

This  was  the  verdict  on  the  bank  note  system  current 
immediately  prior  to  the  war,  and  which  system  then  for- 
tunately ended.  If  there  had  been  no  war,  the  banking  and 
currency  system  of  the  country  would  have  been  a  pressing 
and  distressing  problem.  We  find  no  record  that  the 
system  then  in  existence  was  considered  satisfactory  by 
any.  In  1862  there  were  1,500  banks,  and  upwards  of 
1,200  of  these  had  been  counterfeited.  There  were 
upwards  of  1,800  varieties  of  imitation  notes,  more  than 
3,000  alterations,  and  about  1,700  varieties  of  spurious  notes. 
Bank  notes  were  bits  of  paper  recognizable  as  a  specie  by 
shape,  color,  size  and  engraved  work ;  any  piece  of  paper 
which  had  this  appearance  came  with  a  prestige  of  money, 
the  only  thing  in  the  shape  of  money  to  which  the  people 
were  accustomed.  Any  person  to  whom  these  were 
offered,  unskilled  in  banking,  had  no  choice  but  to  take 
them.  We  have  here  an  illustration  of  the  evil  of  authoriz- 
ing corporations  whose  authority  and  existence  are  derived 
from  the  State  to  issue  circulating  money.  Such  issues 
seem  to  bear  to  the  masses  a  certain  guarantee  which  does 
not  exist. 

To  obtain  a  better  idea  of  the  reckless  banking  which 
existed  prior  to  the  war,  we  find  that  in  the  years  immedi- 
ately prior  to  the  panic  of  1857  the  loans  of  the  banks 
within  the  United  States  would  exceed  on  an  average 
about  15  per  cent,  the  combined  capital  and  deposits,  due 
to  the  wild,  insecure  circulation.  This  condition  of  the 
banks  existed  until  the  commencement  of  the  war. 

This  is  the  condition  that  the  opponents  of  the  Green- 
backs  wish  to  bring  about  again.  In  1861,  immediately 
prior  to  the  war,  a  similar  condition  yet  existed.  There 
were  then  1,600  banks  with  a  capital  of  $425,000,000;  $250,- 
000,000  of  deposits  and  $690,000,000  of  loans,  and  a  circula- 
tion of  $200,000,000.  Due  to  the  bank  failures  in  1857  and 
the  following  years,  a  depression  in  business  existed  which, 
notwithstanding  the  rich  harvest  in  i860,  could  not  be 
lifted.  While  speculation  at  times  flourished,  there  was 
a  prevailing  depression  in  all  industries  similar  to  that 
existing  at  the  opening  of  the  present  year.  To  this  de- 
pression the  actual  outbreak  of  the  civil  war  may  be  attrib- 
uted. 


143 


INDUSTRIAL  CORPORATIONS. 

There  are  forty-five  States  within  the  United  States,  and 
the  legislators  of  all  have  tried  to  excel  each  other  in  pass- 
ing- laws  favoring  industrial  corporations  as  against  the 
individual  and  copartnership  enterprises.  Promoters  and 
men  of  capital,  entirely  unacquainted  with  the  details  of  the 
industries  which  they  have  managed  to  control  and  monop- 
olize, obtain  a  charter  from  a  State  entirely  removed  from 
their  business  operations  or  their  own  residences.  Such 
action  on  its  face  is  fraudulent,  and  many  of  these  corpora- 
tions are  formed,  as  far  as  the  incorporators  are  concerned, 
as  a  pretext  for  the  manipulation  of  the  stock  and  the  foist- 
ing of  this  stock  upon  the  public. 

Prosperity  of  manufacturers  is  indicative  of  the  wealth 
and  independence  of  the  country,  but  these  corporations 
demoralize  the  manufacturing  industries.  A  founder  of  a 
large  manufacturing  enterprise  is  aided  by  his  competent 
assistants  ;  on  his  death,  the  business,  in  place  of  descending 
to  those  who  assisted  him  in  building  it  up,  falls  into  the 
hands  of  the  promoter,  into  the  hands  of  men  who  will  at 
once  discharge  these  assistants,  the  rightful  successors  to 
the  business,  and  use  the  business  for  stock-jobbing  opera- 
tions. 

As  stated,  it  is  only  recently  before  the  New  York  State 
Legislative  Committee  that  one  of  the  witnesses  stated  that 
the  common  stock  of  a  corporation  was  given  for  good-will ; 
the  good-will  in  this  case  must  have  been  the  opportunity 
for  "  stock  jobbing  "  ;  for  the  watered  stock  forbids  the 
idea  of  the  common  stock  ever  attaining  any  value.  All 
industrial  corporations  of  whatever  nature,  whether  termed 
trusts  or  not,  are  against  the  interests  of  the  people,  and 
threaten  the  very  foundation  of  the  Government. 

These  industrial  corporations  and  all  industrial  combi- 
nations may  be  compared  to  a  "  double  corner,"  for  they 
not  only  corner  the  article,  but  the  very  production 
of  the  article,  and,  therefore,  are  more  destructive  than  the 
temporary  corners  that  may  at  times  be  forced  by  specu- 
lators. Such  corporations  must  not  be  classed  with  cor- 
porations that  aid  the  individual  in  his  calling.  Our 
Constitution  guarantees  liberty  to  all  alike,  yet  under  its 
laws  a  modern  feudal  system  is  established  through  these 


144 

industrial  corporations  which  enslave  the  individual  and 
force  him  to  pay  tribute.  The  promoter  of  these  combina- 
tions is  fond  to  quote  in  defence  of  his  schemes  oppositions 
on  the  part  of  the  masses  to  improvements  in  labor-saving 
machinery,  etc.  The  American  laborer  and  mechanic  is 
too  intelligent  to  express  any  opposition  to  machinery 
which  increases  the  value  of  his  labor. 

In  the  early  history  of  our  country,  the  enterprising 
merchant  and  manufacturer  devoted  his  attention  strictly  to 
his  business,  and  not  to  stock  jobbing,  with  the  result  that 
the  American  sailing  vessel  was  found  in  every  quarter  of 
the  globe.  An  honest  man  will  conduct  his  business 
under  his  own  name,  or  copartnership  name,  and  would 
not  force  upon  the  public  an  interest  in  his  business  under 
misrepresentations. 

We  have  to-day  industrial  corporations  who  have  issued 
bonds,  preferred  stock  and  common  stock,  the  managers, 
owners  of  bonds  and  preferred  stock,  paying  themselves 
high  salaries  in  addition  to  the  interest  and  dividends,  and 
thus  defrauding  the  general  public,  which  is  holding  the 
common  stock,  even  of  the  interest  on  its  money. 

It  is  a  common  practice  on  the  part  of  the  promoters  of 
industrial  corporations  to  quote  the  Standard  Oil  Company 
as  having  benefited  the  public  in  the  reduction  of  the  price 
of  oil.  This  reduction  is  due  entirely  to  other  causes,  and 
but  for  the  existence  of  the  Standard  Oil  Company  the 
price  of  oil  to-day  would  be  less  than  it  is,  which  fact  is 
proved  by  the  measures  the  Standard  Oil  Company  takes 
in  different  localities  to  suppress  competition. 

A  law  should  be  passed  under  the  interstate  act  com- 
pelling every  industrial  corporation  to  offer  the  same  price 
throughout  the  United  States,  subject  only  to  the  differences 
in  transportation  charges.  There  is  no  country  on  the 
face  of  the  earth  more  oppressed  with  industrial  corpora- 
tions than  the  United  States,  for  the  simple  reason  that 
they  are  formed  here  under  forty-five  different  laws,  while 
in  other  countries,  though  they  exist,  they  are  subject  to 
uniform  laws.  In  the  United  States  a  single  State  like 
New  Jersey  or  West  Virginia  will  practically  control  in 
any  one  industry  the  entire  United  States. 


145 


PROFIT  ON  NATIONAL  BANK  CIRCULATION. 

For  many  years  attempts  have  been  made  by  the  Na- 
tional Banks  for  increased  circulation  and  reduction  of  the 
present  tax.  Statements  have  been  made  by  employees  un- 
der the  last  administration  that  the  bank  circulation,  not- 
withstanding that  it  represents  a  loss  to  the  Government  of 
at  least  4  per  cent,  per  annum  on  a  circulation  properly 
belonging  to  the  Government,  at  present  exceeding  $250,- 
000,000,  that  the  banks  were  not  deriving  much  benefit 
therefrom. 

The  4  per  cent,  bonds  sold  by  the  Government  in  Feb- 
ruary, 1895,  at  about  104^,  represent  a  rate  of  interest  of 
3|  per  cent.  The  same  are  deposited  with  the  Govern- 
ment for  circulation,  and  for  each  $100,000,  there  is  issued 
$85,000  in  circulation. 

The  banks  first  receive  3f  per  cent,  interest ;  in  other 
words,  $3,750  per  annum,  the  additional  \  per  cent,  interest 
liquidating  the  premium  paid  ;  but  the  issue  of  $85,500  of 
money  qualified  to  act  as  reserve  enables  the  bank  through 
the  ordinary  banking  operation  of  loans  and  redeposits  to 
extend  its  loans  to  the  amount  of  $342,000,  and  to  a  still 
greater  amount  where  less  than  25  per  cent,  reserve  is  re- 
quired. If  these  loans  are  made  by  the  bank  at  the  rate  of 
6  per  cent.,  the  bank  would  derive  an  additional  profit  of 
$20,520,  making  a  total  of  $24,270,  gross  income.  From  this 
to  be  deducted  tax  on  circulation,  $900  ;  redemption  charges, 
$73.52— total,  $973.53,  leaving  a  net  profit  of  $23,296.47  as 
the  annual  income  resulting  from  the  deposit  of  $100,000 
in  Government  bonds,  representing  over  22^  per  cent.  To 
recapitulate  : 

The  circulation  against  $100,000  in  bonds $85, 500  00 

Interest  3J  per  cent,  at  basis  sold 3>  75°  °° 

Less— Tax  on  circulation $900  00 

Redemption  charges 73  53 

$973  53 

This  amount  paid  b)  the  Government,  net $2, 776  47 

Interest  on  loans  as  above 20, 5  20  00 

Making  a  total  as  above  stated  of $23--  29^  47 


146 

The  $2,776.47  should  not  be  paid  out  by  the  Govern- 
ment, the  banks  deriving  through  a  sound  monetary 
system  such  large  profits  that  the  interest  on  bonds  de- 
posited for  circulation  should  cease  until  the  circulation 
has  been  redeemed. 

It  may  be  said  that  the  individual  bank  has  not  the  op- 
portunity of  deriving  the  full  benefit  from  the  increased 
loans,  but  we  will  consider  the  question  entirely  disconnected 
from  the  question  of  loans.  The  $100,000  in  bonds  cost 
$104,500,  issue  of  $85,500,  leaving  $19,000  as  the  capital 
invested  by  the  banks.  Three  and  three-quarters  per  cent- 
interest  equals  $3,750  {%  per  cent,  allowance  for  premium 
paid);  tax,  1  per  cent,  $900;  expenses,  $73-53!  deduct 
$973.53,  leaving  $2,776.47  as  the  income  from  an  invest- 
ment of  $19,000,  with  a  repayment  of  principal  to  the  extent 
of  $250  per  annum,  or  upwards  of  15  per  cent.  This  would 
leave  the  profit  on  loan  of  $342,000  to  be  shared  with 
other  banks  as  circumstances  may  warrant.  These  profits 
in  either  case  more  than  cover  any  fluctuation  in  the  market 
value  of  these  bonds ;  but  as  this  bank  note  circulation  is  a 
disturbing  element  in  the  monetary  system  of  our  country, 
no  further  increase  should  be  allowed  except  under  such 
restrictions  as  may  be  made  necessary  to  maintain  proper 
reserve,  and  then  only  on  surrender  of  interest  on  bonds. 

The  New  York  Clearing  House  Banks,  as  per  statement 
of  October  23d,  have  on  deposit  $617,000,000;  loans,  $562,- 
000,000  ;  and  a  circulation  of  $16,000,000  ;  a  surplus  reserve 
of  $23,000,000.  Without  this  circulation  of  $16,000,000,  and 
to  maintain  the  same  surplus  reserve,  their  loans,  as  well  as 
deposits,  would  be  materially  less.  To  surrender  the  inter- 
est on  the  bonds  deposited  as  security  would  not  materially 
effect  their  income.  The  reserve  held  by  banks  should  be 
of  Government  money  only.  If  our  National  Banks  would 
show  a  little  loyalty,  not  alone  to  the  Government  and 
people,  but  to  their  depositors,  they  would  not  antagonize  a 
stable  money  any  longer, 

The  New  York  Clearing  House  Banks  have  agreed  not 
to  offer  or  accept  silver  certificates  in  payment  of  balances, 
a  practice  that  should  be  brought  to  the  attention  of  Con- 
gress. 


i47 

BILLS  BEFORE  CONGRESS. 

In  answer  to  a  statement  which  appeared  in  the  news- 
papers that  the  Committee  on  Banking-  and  Currency 
invited  suggestions  from  business  men,  I  addressed  the 
following  letter  to  the  Chairman  of  the  Committee: 

"  New  York,  Jan.  28,  1896. 
"  Dear  Sir: 

"  Being  engaged  ardently  since  many  years  in  working 
for  a  solution  of  the  monetary  question,  I  have  completed  a 
system  which  I  feel  confident  will  meet  the  approval  of 
your  Committee.  I  shall  have  the  honor  of  submitting 
same  to  you  within  thirty  days. 

"  The  system  will  give  the  people  the  advantages  of  the 
circulation,  offer  to  the  National  Banks  increased  oppor- 
tunities, rehabilitate  silver,  and  establish  the  gold  standard 
upon  an  absolutely  firm  basis  and  enable  the  Government 
to  meet  every  demand  in  gold. 

"  The  system  will  make  it  advantageous  to  the  banks  to 
deposit  their  gold  with  the  Government  and  to  hold  the 
coined  silver  in  their  vaults. 

"  The  system  guarantees  an  outlet  for  silver,  not  only 
temporarily  to  the  vaults  of  the  banks,  but  for  export  or 
for  settlements  of  balances  abroad. 

"  As  some  time  must  elapse  before  our  money  system 
can  be  perfected,  and  as  no  currency  system  can  be  secured 
except  based  on  bullion  reserve,  permit  me  to  suggest,  to 
protect  gold  reserve,  that  future  issues  of  National  Bank 
circulation  be  made  to  depend  upon  the  $100,000,000  reserve 
being  intact.  This  would  be  a  step  towards  making  our 
circulation  self  rectifying. 

"  Respectfully  yours, 

"  Fred'k  Wm.  Luttgen." 

After  writing  the  above  I  received  a  copy  of  a  bill  before 
Congress,  introduced  by  the  Chairman  of  the  Committee 
on  Banking  and  Currency.  Attached  to  this  copy  was  an 
extract  from  The  American  Banker,  of  January  8,  1896,  in 
which  the  astounding  statement  was  made  that  the  Chair- 
man of  the  House  Committee  on  Banking  and  Currency 
had  stated  that  the  Committee  would  not  attempt  to  intro- 


148 

duce  new  rules  for  controlling  the  banks  in  any  bill  they 
may  report. 

It  is  impossible  to  conceive  how  a  representative  and 
chairman  of  one  of  the  leading  committees  can  make  such  a 
statement,  which  statement  would  imply  that  the  National 
Bank  interest  had  practically  control  of  our  Government. 

On  receipt  of  this  statement  I  abandoned  the  idea  of 
submitting  my  work  to  the  Committee,  as  then  constituted, 
until  a  change  of  sentiment  should  prevail.  The  bill  itself 
is  more  astounding  than  the  statement  contained  in  The 
American  Banker. 

It  proposes  to  issue  to  the  banks  a  legal  tender  green- 
back, payable  in  gold,  or,  as  expressed,  "  in  coin  of  intrinsic 
value,"  in  exchange  for  any  of  the  present  existing  money, 
but  not  to  exceed  in  amount  the  capital  of  the  bank. 

It  further  proposes  to  issue  additional  legal  tender 
greenbacks,  to  an  unlimited  amount,  to  these  banks,  against 
a  deposit  of  miscellaneous  bonds,  whether  railroad  or  other- 
wise, acceptable  to  the  Secretary  of  the  Treasury. 

It  furthermore  provides  for  a  bank  issue  of  currency 
notes,  termed  in  this  bill  "  reserve  notes,"  not  to  exceed  in 
amount  the  reserve  held  by  the  banks,  nor  exceed  the 
amount  of  treasury  notes  issued  against  money,  nor  com- 
bined exceed  the  capital  of  the  bank.  A  bank  under  this 
bill  can  therefore  issue  notes  to  the  extent  of  its  capital,  and, 
in  addition  thereto,  whatever  amount  the  bank  may  desire, 
secured  by  miscellaneous  bonds. 

This  bill  provides,  in  place  of  the  banks  supplying  a  re- 
demption fund,  as  under  the  present  law,  that  the  Govern- 
ment shall  practically  hold  of  its  own  money  an  amount 
equal  to  10  per  cent,  of  the  bank  notes  for  the  purpose  of 
prompt  redemption  of  these  bank  notes.  But  this  is  not 
all ;  both  character  of  notes  are  guaranteed  and  finally  made 
payable  by  the  United  States,  although  having  no  security 
whatever  on  hand  for  the  reserve  notes,  but  the  Govern- 
ment must  take  its  chances  to  recover  from  the  assets  of  the 
bank.  Where  the  Government  shall  find  the  money  for  the 
redemption  of  the  banks'  legal  tender  notes  or  the  reserve 
notes  is  not  provided  for  in  the  bill,  except  that  this  shall 
be  done  from  money  not  otherwise  appropriated. 

This  seems  a  very  simple  manner  of  paying  bills,  and 
should  be  adopted  in  connection  with  the  current  expenses 


149 

of  the  Government,  interest  on  bonds,  pensions,  etc.,  and 
tariff  and  internal  revenue  taxes  would  no  longer  be  needed. 

The  bill  also  provides  for  a  "  Board  of  Advisors,"  con- 
sisting of  seven  presidents  of  banks.  Would  it  not  be  well 
to  put  the  entire  machinery  of  our  Government  into  the 
hands  of  the  banks  and  abandon  the  Legislative,  Executive 
and  Judiciary  departments? 

Of  Government  paper,  there  has  been  but  $246,000,000 
outstanding  unsecured,  while  the  capital  of  the  National 
Banks  aggregates  about  $700,000,000,  and  would  require  a 
cancellation  of  Government  money  to  the  extent  of  $350,- 
000,000.  We  have  here  therefore  an  amount  exceeding 
$100,000,000,  which  would  be  paid  to  the  Government,  and  of 
which  no  disposition  is  made  in  the  bill.  The  bill  states 
that  the  amount  shall  be  covered  into  the  Treasury  as  a 
miscellaneous  receipt. 

The  bill  appears  to  have  but  one  object,  and  that  is  to 
favor  the  banks  at  whatever  cost  to  the  people.  The  bill 
practically  provides  for  an  unlimited  issue  of  notes,  guaran- 
teed by  the  Government,  in  place  of  the  present  limited 
issue  of  $246,000,000,  and  represents  a  worse  proposition 
for  fiat  money  or  "  wild-cat "  money  than  has  ever  been 
presented. 

The  bill  is  full  of  surprises,  considering  the  source  from 
which  it  emanates.  It  tells  us  that  when  the  $246,000,000  of 
legal  tender  notes  uncovered  have  been  paid  into  the  Gov- 
ernment, the  Government  will  be  relieved  from  paying 
gold,  and  that  it  would  be  a  matter  of  much  indifference 
what  the  Government  pays  out,  as  in  the  case  of  any  private 
citizen.  We  have  here  a  betrayal  of  absolute  ignorance  of 
the  science  of  money  or  the  duty  of  the  Government 
towards  its  people.  It  is  not  a  question  of  a  demand  upon 
the  Government  for  gold,  but  it  is  a  question  of  preserving 
specie  payment  for  the  country,  of  whatever  nature  the 
paper  circulation  may  be. 

To  authorize  a  banking  corporation  to  issue  legal  tender 
notes,  or  any  notes  whatever,  is  a  crime  against  the  people, 
except  in  the  case  of  our  war  period,  when  it  was  a  war 
measure. 

The  bill  makes  no  provision  for  increasing  the  metal  re- 
serve of  the  country,  nor  for  indemnifying  the  general 
public  against  the  depreciation  of  the  silver  dollar,  which  by 


150 

the  operation  of  this  bill  will  be  largely  forced  upon  the 
public. 

When  the  law  to  maintain  the  parity  of  all  moneys  is 
canceled  by  the  cancellation  of  outstanding  demand  notes, 
the  legal  tender  nature  of  our  silver  dollar  cannot  be  main- 
tained. 

The  bill  also  provides  for  the  payment  of  duties  in  gold, 
by  which  the  Government  practically  cancels  the  legal 
tender  quality  of  the  silver  dollar. 

At  the  same  session  of  Congress  another  bill  was  intro- 
duced and  by  a  member  of  the  same  committee,  bearing 
the  number  6,442.  This  bill  seems  to  have  for  its  prime 
motive  the  reorganization  of  the  Government  indebted- 
ness, a  reorganization  in  the  manner  of  the  reorganization 
of  many  of  our  railroads,  and,  of  course,  at  heavy  expense 
to  the  Government. 

The  bill  proposes  : 

That  a  new  2  percent,  bond  shall  be  issued,  payable  in 
gold  and  exchangeable  for  the  present  bonds  at  their  market 
value.  Special  care  seems  to  have  been  taken  to  advance 
the  market  value  of  the  present  bonds  by  the  advantages 
offered  to  the  new  bond.  It  is  proposed  that  the  new  bond 
shall  be  taken  as  security  for  a  legal  tender  note  to  be  is- 
sued to  the  banks  to  the  extent  of  $100  for  every  $105.  We 
will  allow  the  possibility  that  this  bond,  considering  the  ad- 
vantages it  possesses,  will  continue  to  sell  at  par,  but  it 
would  not  be  worth  par  for  general  liquidation  purposes, 
and  would  therefore  represent  an  insufficient  security. 

The  bill  provides  further  that  banks  shall  hold  at  least 
15  per  cent  of  their  deposits  in  gold  and  that  10  per  cent, 
may  be  held  in  silver,  but  that  one-half  of  such  25  per  cent, 
reserve  may  be  represented  by  deposits  in  reserve  cities  or 
notes  of  other  banks.  We  have  here  another  concealed 
measure  of  forcing  the  silver  dollar  upon  the  public  and  a 
means  for  the  banks  to  pay  out  silver  as  quickly  as  it  may 
be  received. 

This  bill  provides  for  a  further  issue  of  bank  notes 
based  upon  the  deposits  and  to  the  extent  of  50  per  cent, 
off  such  deposits. 

This  issue  would  take  from  the  depositor  much  of  the 
security  he  now  enjoys.     It  may  in  fact  be  stated  that  the 


i5i 

issue  is  one  based  on  the  capital  of  depositors  who  would 
be  likely  to  suffer  losses  without  deriving  any  benefit  from 
the  proposed  issue. 

This  bill  practically  reduces  the  present  reserve  of  15 
per  cent,  in  Government  money  to  a  reserve  of  4^  per  cent, 
in  gold,  and,  in  the  case  of  banks  in  reserve  cities,  the  re- 
serve would  be  similarly  reduced  to  7^  per  cent,  in  gold. 
How  any  one  can  consider  a  reserve  of  4^  per  cent,  in  the 
case  of  country  banks  as  sound  banking  is  beyond  compre- 
hension. These  bills  are  so  bold  and  would  indicate  that 
our  National  Banks  are  confident  of  controlling  legislation. 

The  period  for  miscellaneous  bank  circulation  has 
passed.  It  is  only  an  experiment  of  a  primitive  state  and 
does  not  exist  under  any  of  the  leading  commercial  nations. 

If  France  tolerated  4,000  banks  all  struggling  for  circu- 
lation, the  present  stability  of  her  money,  although  artifi- 
cial, could  not  exist.  If  India  had  a  miscellaneous  bank  note 
circulation,  the  stable  rates  of  exchange  which  she  has  re- 
cently enjoyed  would  be  impossible. 

It  is,  however,  possible  to  perfect  our  monetary  system 
by  limiting  the  bank  note  issue  to  its  present  amount. 


ADDENDA, 


The  currency  plan  submitted  by  the  Secretary  of  the  Treasury  is  un- 
American,  against  the  interests  of  the  public  and  in  favor  of  the  National 
Banks  and  concentrated  speculative  capital.  It  is  un-American  because  it 
is  retrogressive.  It  proposes  that  we  shall  acknowledge  to  the  world  that 
we  have  made  a  mistake  in  our  monetary  legislation  and  to  retire  circula- 
tion at  a  severe  loss,  as  against  the  proposition  of  the  Luttgen  Monetary 
System,  which  system  proposes  to  perfect  the  existing  money  and  to  over- 
come the  obstacles  speculators  have  put  into  the  path  of  the  Government, 
and  to  perfect  our  circulation  and  to  establish  a  money  inferior  to  none. 

It  is  against  the  interests  of  the  public,  for  it  is  class  legislation. 
Further,  it  proposes  to  change  $200,000,000  of  non-interest  paying  obliga- 
tions into  obligations  demanding  the  payment  of  $5,000,000  interest  per  an- 
num. It  is  against  the  interest  of  the  public  in  creating  an  unsound  money, 
a  system  of  issue  by  banks  which  experience  has  condemned  in  every 
mercantile  nation.  It  proposes  to  refund  bonds  for  the  benefit  of  bond- 
holders, and,  by  deferring  paying  a  portion  of  the  interest,  to  pay  bond- 
holders about  $20,000,000  more  than  they  would  receive  through  the  present 
bonds  at  maturity.  It  will  cost  the  nation  within  nine  years  at  least  $65,- 
000,000  without  conferring  a  single  advantage.  It  is  puerile  financiering  to 
refund  bonds  when  speculation  has  driven  up  their  prices. 

We  recognize  in  this  bill  the  influence  of  the  reorganizer  and  promoter, 
who,  to  place  their  fraudulent  securities  upon  the  public,  favor  a  fiat  bank 
money,  to  create  inflation,  during  the  progress  of  which  they  may  pay 
themselves  in  gold  before  the  inevitable  collapse.  The  truth  must  be  recog- 
nized that  a  sound  circulation  cannot  be  based  upon  the  issue  of  any 
corporation  having  other  obligations  out.  A  bank  of  deposit  cannot  safely 
become  a  bank  of  issue.  There  is  no  safety  for  a  stable  money  in  such  a 
combination  unless  a  reserve  in  gold  of  about  50  per  cent,  of  both  deposit 
and  issue  were  kept  on  hand,  and  this  is  practically  impossible. 

Those  who  are  advocating  this  bank  issue  are  not  alone  imperiling  the 
material  welfare  of  this  country,  but  its  political  institutions  as  well.  The 
country  will  look  to  an  upright  congress  to  save  it  from  the  over-hanging 
disaster. 

The  Luttgen  Monetary  System,  however,  is  American  and  patriotic. 
It  will  save  the  Government  in  interest  alone  at  least  $90,000,000  during  the 
same  period  of  nine  years,  making  a  difference  and  benefit  to  the  nation  of 
$155,000,000  over  the  Secretary's  plan. 

It  is  not  possible  that  the  Secretary's  bill  will  ever  be  seriously  considered 
by  Congress.  Should  such,  however,  be  the  case,  it  will  be  time  enough 
to  thoroughly  criticise  and  expose  it.  A  true  monetary  system  in  this 
country  must  concentrate  the  gold  and  maintain  the  interchangeable  quality 
of  all  money  and  relieve  all  banks  from  actual  gold  redemption. 

A  circulation,  upon  any  portion  of  which  bankers'  credits,  in  every  town 
and  village  of  the  land,  can  rest  with  confidence,  will  benefit  the  country 
more  than  any  other  system. 


{ 


UBRARY 


HG 

423 

L97s 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


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